Jan. 18 (Bloomberg) -- The Bush administration is close to completing an economic-stimulus proposal that economists say may have a modest effect on boosting the economy and averting a recession.

The plan, which is subject to revision, will include $800 rebates for individuals and $1,600 for households as well as tax breaks to encourage businesses to invest, people familiar with the package said.

President George W. Bush discussed various options with congressional leaders yesterday and will lay out the principles, though not the details, of the package today. Congressional leaders say any economic-stimulus plan may be as much as $150 billion.

``It's getting money to people who are likely to spend it,'' Leonard Burman, director of the Washington-based Tax Policy Center, said of the Bush plan. ``It might do a little good for the economy.''

Bush has decided the U.S. needs a short-term economic assist from the government to avert a recession, White House officials said yesterday.

``The president does believe that over the short term, to deal with this softening of the economy, that some boost is necessary,'' Deputy Press Secretary Tony Fratto told reporters at a briefing.

`Timely' Stimulus

Ed Gillespie, senior counselor to the president, said today that Bush will call for a ``timely'' package of measures.

``The president is going to call for a growth package that is timely, that is direct, that is simple, that does allow for taxpayers to have more money to spend,'' Gillespie told Bloomberg Television.

White House and Treasury officials have been working since late November on the outlines of a plan to stave off a recession or alleviate the effects if one occurs.

Bush is scheduled to outline his principles from the White House shortly before noon Washington time.

``A big part of the program should be focused on consumers, individuals, families, getting money to them because they will spend it,'' Treasury Secretary Henry Paulson said today on NBC's ``Today'' program.

He said an economic revival program in 2001 showed ``that people spent between a third and two-thirds of the money and spent it quickly. The lesson here is that we need to move quickly,'' Paulson said.

Standard & Poor's 500 Index futures expiring in March added 12.7 to 1,352.4 at 7:57 a.m. in London, indicating U.S. indexes may rebound today. Japan's Nikkei 225 Stock Average rose 0.6 percent at the close in Tokyo.

Stock Market

Many investors already are concerned the U.S. has slipped into recession, with stocks yesterday plunging, in their worst three-day decline since 2002.

According to the people familiar with discussions inside the White House, Bush's package of measures will include a temporary elimination of the bottom tax rate, which is now 10 percent, and a consequent lump-sum rebate to all taxpayers.

Businesses would get a tax break that would allow them to deduct 50 percent of the price of new equipment they purchase this year. Small businesses would be able to deduct as much as $200,000 in equipment purchases, up from $112,000 now.

Bush will leave out a demand that tax cuts passed in 2001 and 2003, scheduled to expire by the end of 2010, be made permanent. ``The president supports a permanent extension of his tax cuts, and he supports a short-term growth package, but they are separate,'' Fratto said.

Limit the Proposals

Both sides will have to limit their proposals to measures designed to boost the economy in the short run, according to House Democratic Caucus Chairman Rahm Emanuel of Illinois.

``This should not be an attempt to get what I call the goods through customs here,'' said Emanuel.

He said Congress is likely to approve some stimulus package soon. ``I think in the next 30-45 days, but if it is 46, it is not like we failed,'' he said.

Bush discussed the need for an economic boost on a conference call yesterday with congressional leaders from both parties. The call was ``productive,'' said House Speaker Nancy Pelosi, a California Democrat, adding that Bush ``understands the concerns of the American people.''

House Republican leader John Boehner told reporters in Washington that a package of $100 billion to $150 billion is being discussed by administration officials and lawmakers.

Senate Majority Leader Harry Reid voiced concern that Bush was getting out in front of Congress with his plan.

`Disappointed'

``I am disappointed that he is rejecting a request from leaders of both parties and both chambers to work with us directly to develop a bipartisan package rather than unilaterally detailing his own approach,'' the Nevada Democrat said in a statement last night.

Democrats in Congress are working on their own plan, which is also expected to include a tax rebate, as well as public spending and additional aid for the poor through food stamps and other programs.

Federal Reserve Chairman Ben S. Bernanke told lawmakers yesterday that a $100 billion package that provides $60 billion to $70 billion in spending would have ``significant'' effects on economic growth in the second half of this year.

Bernanke's endorsement of a fiscal stimulus signals he sees some risk of recession, economists said. He reiterated his view that the ``the downside risks to growth have become more pronounced,'' while adding that the Fed isn't forecasting an economic contraction.

More Than Rates

``In order to control the economy you need more than just the blunt instrument of interest rates,'' said Peter Dixon, an economist at Commerzbank AG in London. ``The Fed may well have to incorporate a recession into their forecast because we're very, very close to one right now.''

Bernanke spoke as reports showed that the U.S. housing slump deepened in December, and a gauge of manufacturing tumbled to a level unseen since the 2001 recession.

Some economists faulted Bush's plan for leaving out low- income Americans, most of whom pay little in income taxes but are likely to spend the bulk of any cash infusion they get, and for including tax breaks for businesses.

Why ``exclude people who pay payroll taxes but not income taxes?'' said Lawrence Mishel, president of the Economic Policy Institute. ``And what businesses need are customers, not subsidies for investment.''

To contact the reporter on this story: Matthew Benjamin in Washington at mbenjamin2@bloomberg.net

Last Updated: January 18, 2008 08:52 EST