Bush Signals Corporate Tax Cut, But No Bailouts
There have been increasing calls for some kind of government action to ease pressure building in credit markets. Some have called for a interest rate increase, which Bernanke declined to do this time around saying controlling inflation remained a top concern.
Now President Bush in comments yesterday discussed the idea of restructuring corporate tax rates. However, for now, he balked at the idea of bailing out failing lenders or easing the ability of Freddie Mac and Fannie Mae to buy mortgages and mortgage-backed securities.
Advisers presented Bush with a series of ideas to restructure corporate taxes, possibly eliminating narrowly targeted breaks to pay for a broader, across-the-board rate cut. In an interview with a small group of journalists afterward, Bush said he was “inclined” to send a corporate tax package to Congress, although he expressed uncertainty about its political viability.
The president’s comments came as he tried to calm volatile stock and mortgage markets and reassure the country that the economy is fundamentally strong. Despite mounting concern over the downturn in the housing market, he dismissed proposals advanced by prominent Democrats to grant government-chartered Fannie Mae and Freddie Mac more freedom to buy mortgages and mortgage-backed securities. And he ruled out any taxpayer bailout of lenders threatened by the subprime home-loan crisis.
