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Tuesday, September 30, 2008 10:49 AM Economy will be damaged, Bush warns Staff and Wire Reports WASHINGTON -- President Bush said this morning that the economic damage to the nation will be "painful and lasting" if Congress fails to pass a $700 billion bailout bill. Bush said the troubled economy is depending on "decisive action on the part of our government." Bush comments come one day after the House voted narrowly to defeat the $700 billion financial bailout measure that his administration and leading members of Congress had agreed was necessary. Bush said he wanted to "assure our citizens and citizens around the world that this is not the end of the legislative process." He also said "it matters little what path a bill takes to become law. What matters is that we get a law. We're at a critical moment in our economy." The president said he acknowledges that "this is a difficult vote for members of Congress" and that many are uncomfortable with what's transpiring in the economy. But he also declared: "We're in an urgent situation and consequences will grow worse each day we do not act. If our nation continues on this course, the economic damage will be painful and lasting. "We're facing a choice between action and the real prospect of economic hardship for millions of Americans," Bush added. "For the financial security of many Americans, Congress must act." The president cited Monday's free fall in the stock market as an ominous, and real, sign of what's to come if a rescue deal isn't approved. Bush said that administration officials will be talking with congressional leaders today on how to keep legislation moving. Congress is on a break for Rosh Hashanah, the Jewish holiday. "The sooner we address the problem, the sooner we can get back to the path of growth, and job creation," he said. "This is what elected leaders owe the American people." Top congressional and White House officials are scrambling to structure a new bailout proposal that would attract reluctant lawmakers and still soothe the unnerved financial markets. "Doing nothing is not an option," House Majority Leader Steny Hoyer, D-Md., said Monday after seeing the $700 billion emergency package for the nation's financial systems fail 228-205. The House is not scheduled to meet again until Thursday. The outcome of Monday's vote fed a huge sell-off in the stock market, sending the Dow Jones Industrial Average into its biggest single-day plunge -- 777 points. The House vote and the market's terrified reaction shook Washington and New York centers of power -- even overseas markets -- but no immediate solution seemed at hand. U.S. stocks were headed for a partial rebound following today's opening, but a key rate that banks charge to lend to one another money shot higher, signalling a tightening of the availability of credit that could spill through the economy. Wilson County's representatives in the House -- G.K. Butterfield and Walter B. Jones -- both voted with the majority to reject the plan. Jones felt Congress was being asked to react too quickly to a bill that had not been thoroughly examined or discussed. The 120-page bill was not given to congressional staffers until Sunday night. "Five weeks ago, no one seemed to think there was any problem and now we're told we need a $700 billion package to bail out Wall Street?," Jones said Monday afternoon. "It was a fast-moving train and we were being told to get onboard." But Jones' office was flooded with calls from constituents against the bailout. He said he answered 31 calls Saturday and "not one person asked me to vote for it." Jones said he was also persuaded by a letter from BB&T CEO John Allison that urged the federal government to seek another solution. Jones made 20-30 copies and passed them out on the floor of Congress. "What he said made a lot of sense. Why is Congress looking to the losers for solutions to this problem (by funneling money into failing companies) when we can talk to the winners?" he said. Via email, Butterfield said that "the rush to respond has resulted in a plan that is too risky and gives away too much without any guarantees that the problems will be corrected. "While people talk about stabilizing the markets, we should be focused on stabilizing families and our rural communities. I am particularly disappointed that the package failed to include the measures needed to prevent more home foreclosures such as providing bankruptcy judges with the power to modify the terms of mortgages." U.S. Sen. Elizabeth Dole released a statement Monday afternoon, following the House vote. "Now that the $700 billion plan has failed to pass the House of Representatives, I urge the administration to take swift action and develop a market-based solution that doesn't put a massive burden on the shoulders of the taxpayers." In addition to Butterfield, two other North Carolina House Democrats joined their Republican counterparts in voting against the bailout package. "While I believe that something must be done swiftly to stave off a financial crisis, I'm not convinced that this particular plan is the answer," said Rep. Sue Myrick, a Charlotte Republican, in a statement announcing her decision to vote no. Only four North Carolina Congressmen -- Democratic Reps. David Price of Chapel Hill, Brad Miller of Raleigh, Mel Watt of Charlotte and Bob Etheridge of Lillington -- supported the plan. Democratic presidential candidate Barack Obama said in a statement today that lawmakers should not start from scratch as they weigh their next move. From the campaign trail, the Illinois senator proposed that one change would be to raise from $100,000 to $250,000 the amount of federal deposit insurance for bank accounts. He said that such a move would be a boost for small businesses and would make the U.S. banking system more secure as well as restore public confidence in the nation's financial system. Obama also said further inaction would be catastrophic for the economy and for American families. In Iowa, Republican John McCain said that Obama and congressional Democrats "infused unnecessary partisanship into the process. Now is not the time to fix the blame; it's time to fix the problem." The bill's failure came despite furious personal lobbying by Bush and support from House leaders of both parties. But the legislation was highly unpopular with the public, ideological groups on the left and the right organized against it, and Bush no longer wielded the influence to leverage tough votes. Even pressure in favor of the bill from some of the biggest special interests in Washington, including the U.S. Chamber of Commerce and the National Association of Realtors, could not sway enough votes. The legislation the administration promoted would have allowed the government to buy bad mortgages and other deficient assets held by troubled financial institutions. If successful, advocates of the plan believed it would help lift a major weight off the already sputtering national economy. Treasury Secretary Henry Paulson emerged after the vote and warned of a credit crunch that would affect American businesses and said families would find it harder to get student loans and car loans. "We need to work as quickly as possible," he said gravely. "We need to get something done." The sense of urgency was not universal. Many opponents of the bill argued that the package amounted to a too-costly commitment of taxpayer money to bail out financial institutions for their own mistakes. |
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