President Bush supports Bernanke's request for stimulus package for the U.S. Economy.

"Fiscal action could be helpful in principle" and may provide "broader support for the economy" than the Fed can furnish alone through reductions in interest rates, Bernanke said in prepared testimony to the House Budget Committee. However, "the design and implementation of the fiscal program are critically important," he said.

"The president does believe that over the short term, to deal with the softening of the economy, that some boost is necessary," Bush spokesman Tony Fratto said.

"Fiscal action could be helpful in principle, as fiscal and monetary stimulus together may provide broader support for the economy than monetary policy actions alone," Bernanke said.

Combination of programs to diversify the economic risk

If the stimulus package is taken in time, it would not result in increase in taxes and spending, however, in the near term the deficit will increase. We should do nothing to exacerbate the long term financial problems.

Some legislators have been using the current economic slowdown to argue for making the Bush tax cuts permanent. Bernanke just said he doesn't think that would be appropriate.

"A number of analysts have raised the possibility that fiscal policy actions might usefully complement monetary policy in supporting economic growth over the next year or so. I agree that fiscal action could be helpful in principle, as fiscal and monetary stimulus together may provide broader support for the economy than monetary policy actions alone. But the design and implementation of the fiscal program are critically important. A fiscal initiative at this juncture could prove quite counterproductive, if (for example) it provided economic stimulus at the wrong time or compromised fiscal discipline in the longer term."

The president Bush is going to meet with Bernanke and will come out this afternoon with more on the U.S. Economy and the economic stimulus package.