Federal Reserve chairman Ben Bernanke is on Thursday expected to offer his qualified support for the idea of a fiscal stimulus to support the US economy.
The Fed chief will tell Congress that a fiscal stimulus could be useful if well designed, implemented quickly and has no adverse long-term consequences for the budget deficit.
His testimony, which will also address the general outlook for the economy,follows private meetings with members of Congress in recent days.
Chuck Schumer, one of the top Democrats in the Senate, said Mr Bernanke told him on Monday that a stimulus "could have a very positive effect on the economy".
It is likely that the Fed chairman's comments will reinforce political momentum behind a stimulus.
On Wednesday Democratic and Republican leaders in Congress said they would work together to reach agreement on a bipartisan plan.
Nancy Pelosi, speaker of the House of Representatives, said she hoped to find "common ground" with President George W. Bush at a meeting planned for next Tuesday.
"There is an urgency to do something and to do something now," she said. Ms Pelosi discussed the possibility of a fiscal stimulus with John Boehner, the House Republican leader, on Thursday. Mr Boehner told reporters they reached "an agreement that we will work together to try to bring forward a package".
Reflecting the new mood of urgency and hope for bipartisan co-operation, Steny Hoyer, the House Democratic leader, said: "I think it could be done in 30 days."
Former Treasury Secretary Lawrence Summers told the Joint Economic Committee chaired by Mr Schumer yesterday that Congress should quickly enact a $50bn-$75bn (€34bn-€51bn, £25bn-£38bn) package of tax rebates and transfer payments.
The hearing discussed the possibility of a second tranche if the economy continued to deteriorate.
Meanwhile Hillary Clinton, the Democratic presidential candidate, told the Bloomberg news agency that the economy had replaced Iraq as America's topconcern, and urged swift passage of a fiscal stimulus. Voters are facing "incredible anxiety", she said.
The growing political momentum on both sides of the political divide in favour of a fiscal stimulus suggests it may be possible to reach a deal in spite of the pressures of election year politics.
At this stage members of Congress seem to be converging on a centre ground that would include tax rebates.
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