WASHINGTON (Reuters) – Treasury Secretary Henry Paulson on Wednesdaystood by his view that the economy will avoid recession this year andgrow at a slower pace, and that the Treasury will act quickly todistribute tax rebate payments.
"The U.S. economy is diverse and resilient, and our long-termfundamentals are healthy. I believe our economy will continue to grow,although at a slower pace than we have seen in recent years," Paulsonsaid in prepared testimony to the U.S. House of Representatives BudgetCommittee.
President George W. Bush on Wednesday is expected to sign into law a$152 billion fiscal stimulus package that will provide tax rebates tosome 130 million Americans, with most about $600 for an individual and$1,200 for a couple.
Paulson said the Internal Revenue Service would simultaneouslymanage the spring tax filing season and preparations for issuing therebate payments starting in early May.
"Payments will be largely completed this summer, putting cash in thehands of millions of Americans at a time when our economy isexperiencing slower growth," he said. "Together, the payments toindividuals and the incentives for businesses will help create morethan half a million jobs by the end of this year."
Paulson also called on Congress to aid the housing sector by passinglegislation that will modernize the Federal Housing Administration andcreate a new, stronger regulator for Fannie Mae and Freddie Mac, the government-sponsored housing finance enterprises.
Under the stimulus plan, Fannie and Freddie will be temporarilyallowed to invest in larger mortgages, providing more resources forrefinancing troubled mortgages in costly coastal housing markets.
He also urged Congress to pass legislation that will allow states toissue tax-exempt bonds for innovative mortgage refinancing programs.
Paulson also repeated that he would work to help markets reprice risk and work through their current stress.
"While we are in a difficult transition period as markets reassessand reprice risk, I have great confidence in our markets. They haverecovered from similar stressful periods in the past, and they willagain," he said.
(Reporting by David Lawder, Editing by Chizu Nomiyama)
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