Jan. 15 (Bloomberg) -- House Financial Services Committee Chairman Barney Frank said Democrats are likely to reach an agreement with President George W. Bush on an economic stimulus plan that may be passed early this year.

``I think there's a very good chance of a deal,'' Frank said after a meeting between Democratic committee chairmen and House Speaker Nancy Pelosi. Frank said Democratic leaders will meet with Bush at the White House on Jan. 22 and are prepared to reach a compromise on legislation that includes a tax rebate, new spending and other tax cuts.

Frank and other Democrats said they are willing to at least postpone for several years plans to offset any new expenditures or tax cuts with spending reductions or tax increases to prevent increasing the deficit.

House Republican leaders sent a letter to Pelosi today insisting that they will oppose any stimulus plan that is offset under so-called ``paygo'' budget rules with new tax increases.

House Ways and Mean Committee Chairman Charles Rangel, a New York Democrat, said after the Pelosi meeting that Democrats' proposed economic stimulus package shouldn't be offset.

``Paygo is inconsistent with trying to resolve a recession,'' Rangel said.

Bush is likely to meet with his economic advisers later this week, after his return tomorrow night from the Middle East, White House spokesman Tony Fratto said. ``He will be closer to a decision'' on an economic stimulus package of his own, he said.

Partisan Differences

The White House hasn't signaled how far Bush might go to compromise with Democrats in Congress, and lawmakers still show signs of division over some aspects of a stimulus plan, such as whether to include corporate tax-rate cuts.

Tomorrow, Representative Eric Cantor of Virginia, the chief deputy Republican whip in the House, will introduce legislation that includes a 25 percent reduction in marginal tax rates for corporations.

House Majority Whip James Clyburn, a South Carolina Democrat, said today he rejects the idea that a corporate tax cut has a place in a stimulus package. A rebate is the most effective approach, he said.

House Minority Whip Roy Blunt, a Missouri Republican, joined Frank in forecasting a deal early this year on legislation, in part due to pressure on lawmakers in both parties to show they can address the economy as it soars to the top of the election- year agenda.

``My sense is we'll have a conciliatory start and a conciliatory finish, and the middle won't be all that good,'' he said.

Blunt said he favors stimulus legislation that includes a tax rebate of about $500, bonus depreciation and business expensing provisions.

In the Senate, Finance Committee Chairman Max Baucus, a Montana Democrat, announced hearings next week to examine ways to bolster the economy. The Senate returns to work next week.

To contact the reporter on this story: Laura Litvan in Washington at llitvan@bloomberg.net.

Last Updated: January 15, 2008 19:18 EST