WASHINGTON — The last major obstacles to another government stimulus package began crumbling Monday, shifting the debate from whether the fading economy needs a jolt to the best way of providing it.
Federal Reserve Chairman Ben S. Bernanke endorsed the idea of further stimulus for the first time in congressional testimony Monday. Soon after that, the White House said President Bush was "open to ideas" as long as they were "targeted, temporary and timely."
Bernanke's backing of more government stimulus helped stir the stock market. The Dow Jones industrial average closed up about 413 points, or 4.7%, on hopes of more government action and signs that the credit markets were improving.
The new signs of support cheered Democrats, who have been advocating a stimulus package of about $150 billion for several weeks. Their plan would include extending unemployment benefits to several million jobless workers whose federal assistance is coming to an end -- a proposal that appears to have substantial bipartisan support.
Other actions being considered by Democrats are increasing food-stamp benefits and sending extra money to state governments to offset proposed spending cuts that could lead to layoffs of public-sector workers. In addition, Democrats said many already-planned infrastructure projects could be started in 30 to 90 days, providing new jobs for laid-off workers.
Republicans also want to focus on creating jobs but favor stimulating them largely through tax breaks for businesses and consumers. House Minority Leader John A. Boehner (R-Ohio) has suggested temporarily lowering the tax rate for companies that agree to buy distressed financial assets. He also wants to encourage investment by lowering the capital gains tax.
In addition, Republicans have proposed making it easier for companies to start offshore oil drilling to create jobs.
The GOP opposes increasing infrastructure spending, setting up another philosophical showdown over the role of government in aiding the economy. Democrats tend to see infrastructure improvement as an investment in the country's long-term strength, but Republicans contend that the money would do the economy more good in the form of tax cuts that let the private sector make the spending decisions.
Bush, participating in a meeting on the economy with the Central Louisiana Chamber of Commerce, sounded an optimistic note on the financial crisis.
