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Bush warns of 'long and painful recession'

Posted September 24, 2008
Updated September 25, 2008

— President Bush said Wednesday that lawmakers risk a cascade of wiped-out retirement savings, rising home foreclosures, lost jobs and closed businesses if they fail to act on a massive financial rescue plan. "Our entire economy is in danger," he said.

"Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold," Bush said in a 12-minute prime-time address delivered from the White House East Room that he hoped would help rescue his tough-sell bailout package. "Ultimately, our country could experience a long and painful recession."

Said Bush: "We must not let this happen."

The unprecedented $700 billion 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 Republican Party who are revolting at the high price tag and massive private-sector intervention by government. Though there is general agreement that something must be done to address the spiraling economic problems, Bush has been forced to accept changes almost daily, based on demands from the right and left.

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, while warning he would draw the line at regulations he determined would hamper economic growth.

"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.

The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade.

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-independent 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" the toxic assets the government is now proposing to buy and banks that "found themselves" with questionable balance sheets.

Intensive, personal lobbying of lawmakers is not usually Bush's style as president, unlike some predecessors. He does not often make calls or twist arms on behalf of a legislative priority.

But with the nation facing the biggest financial meltdown in decades, Bush took the unusual step of asking Democrat Barack Obama and Republican John McCain, one of whom will inherit the financial mess in four months, and key congressional leaders of both parties to a White House meeting on Thursday to work on a compromise.

Obama spokesman Bill Burton said the senator would attend the meeting scheduled for the afternoon, and senior McCain advisers said he would, too. The plans of the other invitees were unknown. The White House said that the idea for the joint meeting was McCain's and that aides went about setting it up after Bush and McCain spoke Wednesday afternoon.

In another move welcome at the White House, Obama and McCain issued a joint statement using their own dire language to urge lawmakers to act. The two candidates - bitterly fighting each other for the White House but coming together over this issue - said the situation offers a chance for politicians to prove Washington's worth.

"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," they said. "This is a time to rise above politics for the good of the country. We cannot risk an economic catastrophe."

However, the Oval Office rivals were not putting politics aside entirely. McCain asked Obama to agree to delay their first debate, scheduled for Friday, while Obama said it should go ahead.

White House and administration officials have warned repeatedly in recent days of a coming "financial calamity."

But that has not closed the deal, which for many recalls previous warnings of grave threats from Bush - such as before the Iraq war - that did not materialize. So Bush's goal with his speech, his first prime-time address in 377 days, 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.

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."

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 campaign 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.

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  • workerbee Sep 25, 2008

    Everything about Bush has been long and painful. Why should this be any different. Let's just get through until January.

  • rah-rah-rita Sep 25, 2008

    Where has this man been for the last four years. This problem didn't start overnight.

  • Adelinthe Sep 25, 2008

    This isn't a Republican problem.

    This isn't a Democratic problem.

    Because of the way our government is set up, it takes both sides to either agree or disagree on something.

    Additionally financial fiascos like this take decades to come to culmination, and for the past two decades, both parties have held office.

    Right now it's our problem, and if we don't do what's necessary to shore up our economy, our dollar will become even more worthless worldwide than it already is.

    And if it becomes worthless worldwide, the problem will grow even more.

    Can any one of us afford that?

    Do what I've just done...got out of the market including retirement funds, took everything out of the bank except what I need to cover billpay, and it's all at my house.

    It may not be gaining any interest that way, but I'll have enough money to buy a loaf of bread if I need to.

    God bless.

    Rev. RB

  • Adelinthe Sep 25, 2008

    Buddha - "I'm moving to Canada..."

    That's funny! We just had an acquaintance move FROM Canada to Florida because of our medical coverage.

    LOL LOL LOL

  • Adelinthe Sep 25, 2008

    Well, at least he didn't candy coat anything.

    And thank God they didn't preempt Ghost Hunters for his speech. ;o)

    God bless.

    Rev. RB

  • davidgnews Sep 25, 2008

    America..... We've been duped. Treebee123

    It doesn't take much when you keep waving flags in front of people and tell them they're 'free' so that they stop asking questions of their 'leadership.'

  • Garnerwolf1 Sep 25, 2008

    I feel much better now. I see the experts here on Golo are coming to the rescue.

  • bs101fly Sep 25, 2008

    bring it on GW! It's ALL your fault with your 3 trillion dollar war!!!!
    And your ignorance!!!

  • Bill Brasky Sep 25, 2008

    Thanks Bush, hope your friends enjoy our money.

  • dfmlythr Sep 24, 2008

    Bush always leave out something. He's clueless towards middle class and loved among the rich!

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