President Bush called on Congress on Thursday to act quickly to stop the country's economy from falling into a recession.
The president was very careful not to specifically say the word "recession" but said that the economy is growing at a slower rate and we are at "risk of a downturn."
Whatever plan is developed, it should "bolster both business investment and consumer spending," Bush said.
He proposed tax breaks to stimulate spending at about 1 percent of gross domestic product. The U.S. gross domestic product — the value of all goods and services produced here in a year — is $139.7 trillion, meaning that taxpayers could see about $139.7 billion in cuts or rebates.
The president also made a push to have his tax cuts made permanent, something that Democratic congressional leaders have long resisted.
In testimony Thursday, Federal Reserve chairman Ben Bernanke said — while taking no position on the issue — that making the tax cuts permanent deals with the long-term economy and would not be the immediate economic stimulus that's needed.
On "Good Morning America" today, U.S. Treasury Secretary Henry Paulson said that Bush's new stimulus plan "will give a boost to the economy."
"I think our economy is going to continue to grow and I think this can be very helpful if it's robust and meaningful," Paulson said.
Since the beginning of 2008 the stock market has plummeted more than 1,000 points, new-home construction has fallen to a 15-year low and banks continue to report record loses.
These are just some of the economic indicators stoking fears of recession that have been shaking the U.S. economy. A recession is defined by most economists as two consecutive quarters of negative GDP.
Paulson shrugged off concerns that Thursday's stock market plunge was a warning sign for the economy's long-term outlook. He said that right now there are risks for a downside, but that the underlying economy was still strong.
"You're always going to have volatility. … I never pay too attention much [to] one day's results … the long-term fundamentals are strong. The economy is slowing down, but in the long-term we're going to have growth," he said.
The president's new plan resembles the administration's $98 billion stimulus plan enacted in 2001 and 2003. Republicans say it helped thwart a major recession then, something both parties are working together to avoid now.
The crisis has Washington putting aside its differences.
"There's broad agreement with the president and throughout Congress that we need to do something that's going to be robust and meaningful … and quick," Paulson said.
Record rates of home foreclosure have also sent shock waves through the economy. The Democratic presidential candidates have been calling for government intervention, but Paulson says he doesn't think that's appropriate.
Paulson argued that the purpose of the stimulus was to get money into consumers' hands and "to provide an incentive for small business so that they can invest, grow and hire."
On the issue of foreclosures he said he doesn't "believe it makes sense to get in and intervene."
Economic worries are quickly becoming the most important issue in the elections as more and more Americans feel the squeeze.
General Motors, America's biggest automaker, just announced it will offer buyouts to more than half of its hourly employees in the U.S. — that's about 46,000 workers. Even U.S. manufacturing is slowing at a greater-than-expected rate.
Perhaps most alarming is that tapped-out consumers who are opening up their Christmas bills right now are realizing they have no money to spend and nowhere to borrow from.