Tentative deal reached on economic package

WASHINGTON (Reuters) - The White House and the Democratic-led Congress on Thursday reached a tentative deal on an economic stimulus package of tax rebates for families and incentives for business investment with a cost that a top Democrat said may exceed $150 billion.

Aimed at warding off a recession in the world's largest economy, the deal provides for tax rebates of up to $600 for individuals and $1,200 for married couples along with tax breaks for business investment.

The package was hammered out in negotiations that marked a rare show of cooperation between President George W. Bush and the Democratic lawmakers.

The plan also includes provisions aimed at shoring up the battered housing market by boosting the limits on the size of mortgages that can be financed by housing giants Fannie Mae and Freddie Mac.

Confirming the deal to reporters, Senate Majority Leader Harry Reid emphasized that the plan, which he hoped could be sent to Bush's desk to be signed by mid-February, could undergo changes.

"We're going to take another look at it when it comes here (to the Senate)," the Nevada Democrat said.

White House spokeswoman Dana Perino said Bush would make a statement later.

Individuals with annual incomes above $75,000 in adjusted gross income (AGI) and married couples making $150,000 in AGI would get less depending how high their incomes are above those thresholds.

The size of the package is equivalent to around 1 percent of U.S. gross domestic product.

Congress and the Bush administration have been negotiating for several days in an attempt to inject money into consumers' pockets to minimize the fallout from an economic slowdown, prompted by the mortgage and credit crises, that some fear could slide into a recession.

Fears of a U.S. recession prompted a worldwide sell-off in financial markets this week. But expectations of a stimulus package and an emergency interest-rate cut of three-quarters of a percentage point by the Federal Reserve on Tuesday appear to have helped soothe financial markets.