Bush warns of 'long and painful recession'
President Bush on Wednesday warned Americans and lawmakers reluctant to pass a $700 billion financial rescue plan that failing to act fast risks wiping out retirement savings, rising foreclosures, lost jobs and closed businesses. "Our entire economy is in danger," he said.
His dire warning came not long after the president issued extraordinary invitations to presidential candidates Barack Obama and John McCain, one of whom will inherit the mess in four months, as well as key congressional leaders to a White House meeting on Thursday to work on a compromise.
"Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold," Bush said in a 12-minute prime-time address from the White House East Room that he hoped would help rescue his tough-sell bailout package.
Bush explicitly endorsed several of the changes that have been demanded in recent days from the right and left. But he warned that he would draw the line at regulations he determined would hamper economic growth.
"It should be enacted as soon as possible," the president said.
The bailout, which the Bush administration asked Congress last weekend to approve before it adjourns, is meeting with deep skepticism, especially from conservatives in Bush's own party who are revolting at the high price tag and unprecedented private-sector intervention. Though there is general agreement that something must be done to address the spiraling economic problems, the timing and even the size of the package remained in doubt and the administration has been forced to accept changes almost daily.
Seeking to explain himself to conservatives, Bush stressed he was reluctant to put taxpayer money on the line to help businesses that had made bad decisions and that the rescue is not aimed at saving individual companies. He tried to address some of the major complaints from Democrats by promising that CEOs of failed companies won't be rewarded.
"With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all," Bush said. "These are not normal circumstances."
The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade to a large influx of money into the U.S. system from overseas, low interest rates, the "faulty assumption" that home values would continue to skyrocket, easy lending by mortgage companies, over-borrowing by home owners and exuberant building by construction firms.
But while generally acknowledging risky and poorly thought-out financial decisions at many levels of society, Bush never assigned blame to any specific entity, such as his administration, the quasi-indepedent mortgage giants Fannie Mae and Freddie Mac, or the Wall Street firms that built rising profits on increasingly speculative mortgage-backed securities. Instead, he spoke in terms of investment banks that "found themselves saddled with" toxic assets and banks that "found themselves" with questionable balance sheets.
Intensive, personal wheeling and dealing is not usually Bush's style as president, unlike some predecessors. He does not often call or meet with individual lawmakers to push a legislative priority.
But with the nation facing the biggest financial meltdown in decades, Bush took the unusual step of calling Democrat Obama personally about the meeting, said presidential spokeswoman Dana Perino. White House aides extended the invitations to Republican McCain and to GOP and Democratic leaders from Capitol Hill.
Obama spokesman Bill Burton said the senator would attend and "will continue to work in a bipartisan spirit and do whatever is necessary to come up with a final solution." Senior McCain advisers said McCain will attend, too. The plans of the other invitees were unknown, and the exact details of the meeting, which Perino said was aimed at making fast progress to stem the biggest financial meltdown in decades, were still being set.
In another move welcome at the White House, Obama and McCain issued a joint statement urging lawmakers ї in dire terms ї to act.
"Now is a time to come together Democrats and Republicans in a spirit of cooperation for the sake of the American people," it said. "The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail."
The two candidates ї bitterly fighting each other for the White House but coming together over this issue ї said the situation offers a chance for politicians to prove Washington's worth.
"This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe," they said.
However, the Oval Office rivals were not putting politics aside entirely. McCain asked Obama to agree to delay their first debate, scheduled for Friday, to deal with the meltdown. Obama said the debate should go ahead.
Bush last gave a prime-time address to the nation 377 days ago, on Iraq. This one, carried live by all five major television outlets, could be the last of his presidency.
White House and administration officials have warned repeatedly of a coming "financial calamity."
But that has not closed the deal, which for many recalls previous warnings of grave threats from Bush ї such as before the Iraq war ї that did not materialize. So Bush's goal with his speech was to frame the debate in layman's terms to show the depths of the crisis, explain how it affects the people's daily lives and inspire the public to demand action from Washington.
He said that more banks could fail, the stock market could plummet and erase retirement accounts, businesses could find it hard to get credit and be forced to close, wiping out jobs for millions of Americans.
"Ultimately, our country could experience a long and painful recession," Bush said. "Fellow citizens, we must not let this happen."
But he ended on a positive note, predicting lawmakers would "rise to the occasion" and that the nation's economy will overcome "a moment of great challenge."
Through the crisis, the White House has struggled over how to deploy Bush.
As the problem mushroomed over the weekend of Sept. 13, Bush generally stayed out of the limelight, letting Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke take the lead with reporters, lawmakers and the public. Bush remained silent for days.
Since last Thursday, however, the president has talked about the crisis almost daily, although usually briefly, and yet he still has had trouble breaking into the debate. News coverage has barely mentioned Bush's comments.
The decision to pull out perhaps a president's largest available weapon ї the ability to demand a presence on evening television screens nationwide, from a setting with the ultimate bully-pulpit power ї is one sign that the rescue package still faced daunting hurdles.
With so many crises hitting the United States at once, the presidential race has taken a back seat and so has Bush's involvement in politics. Bush canceled a fundraising trip to Florida on Wednesday to deal with the problem, the third time in a week that he has scrapped his attendance at out-of-town fundraisers, either because of the market turmoil or Hurricane Ike.
The economic crisis also is almost certain to overshadow the rest of Bush's four months left in office and could hugely impact his legacy. It has been assumed that the long-term view of Bush's presidency was to be shaped largely by Iraq, Hurricane Katrina and the Sept. 11, 2001, attacks. Now, the dire economic problems and the aftermath of the government's attempted solution will certainly be added to that list.