Jan. 26 (Bloomberg) -- The U.S. Senate is likely to increase unemployment benefits in the economic stimulus plan agreed to by the House and the Bush administration, said Senator Charles Schumer, chairman of the Joint Economic Committee.

Spending additional money on unemployment benefits and food stamps will generate ``more bang for the buck,'' said Schumer, a New Yorker who is the Senate's No. 3 Democrat. The package of provisions designed to boost economic growth was announced Jan. 24 by House Speaker Nancy Pelosi of California, Minority Leader John Boehner of Ohio and Treasury Secretary Henry Paulson.

``The economists tell us that the No. 1 thing to get money into the economy fast is extending unemployment benefits and maybe increasing them by a little bit temporarily,'' Schumer said yesterday in an interview on Bloomberg Television's ``Political Capital with Al Hunt,'' scheduled to air this weekend. ``It's something we'd like to see added in.''

Schumer is among senators looking to make changes to a bipartisan deal that the House and the Bush administration worked out this week to help the U.S. avoid recession. Under that agreement, the Internal Revenue Service will distribute tax-rebate checks to 117 million families earning at least $3,000, give businesses incentives to invest in equipment and allow federally chartered mortgage-finance companies Fannie Mae and Freddie Mac to buy mortgages of up to $729,750.

That plan is a ``good fundamental foundation to work from,'' Schumer said, adding that Pelosi has known all along that the Senate would make changes.

Return

Schumer, 57, said spending on unemployment benefits and food stamps would inject money into the economy faster and offer a better return. He said $1 spent on unemployment benefits boosts growth by $1.79 compared with a $1.17 boost from a tax cut.

Schumer said if a short-term stimulus package such as the one under consideration in the House fails to give the economy a sufficient lift, he would propose a second round of government spending of between $5 billion and $20 billion aimed at infrastructure projects.

``We have neglected infrastructure, and it's something I would do even without a recession,'' Schumer said. ``With recession, it makes the ability to get that done a lot stronger.''

President George W. Bush said in a statement Jan. 24 that the economy faces short-term disruptions in the housing market and rising energy prices.

``The country needs this boost to the economy now,'' Bush said. The agreement will result in ``higher consumer spending and increased business investment this year.''

Emergency Cut

The Federal Reserve this week made an emergency cut in its benchmark overnight lending rate, lowering it three-quarters of a point to 3.5 percent to counter the escalating risk of recession. The central bank is likely to cut the rate an additional half-point at its regular meeting next week, according to a Bloomberg survey of 73 economists.

Economists estimate economic growth was 1.5 percent in the fourth quarter of 2007 and will slow further to 1.1 percent in the first quarter, according to the median estimate of 66 economists surveyed by Bloomberg from Jan. 3-8.

Federal Reserve Chairman Ben S. Bernanke is ``learning on the job,'' Schumer said.

``It takes a while to learn this job because it's different than being behind closed doors just looking at the numbers being an economist,'' Schumer said. ``I think he's on a good path. I don't think he's there yet, but I don't think anyone could be expected to be that way within a year.''

Bernanke became Fed chairman in February 2006.

To contact the reporter on this story: Alison Fitzgerald in Washington at Afitzgerald2@bloomberg.net

Last Updated: January 26, 2008 00:02 EST