IE 11 is not supported. For an optimal experience visit our site on another browser.

Bush remains upbeat on the economy

President Bush traveled a fair distance from Friday to Monday, and not just to New York and back to the White House.
Bush
With a somber-looking Fed Chairman Ben Bernanke at his side, President Bush joshed with reporters after an afternoon meeting of the President's Working Group on Financial Markets, but offered no substantive remarks.Gerald Herbert / AP
/ Source: The Associated Press

President Bush traveled a fair distance from Friday to Monday, and not just to New York and back to the White House.

One day, he warned the economy could land "in a ditch" if the government engaged in big bailout-type help for people losing their homes because they gambled, unwisely or unknowingly, on the now-collapsed subprime mortgage market.

On the other, he endorsed the Federal Reserve's move to provide $30 billion in backing for the rescue of one of Wall Street's largest investment banks, needed because Bear Stearns Cos. risked too much in that very sector.

Meanwhile, throughout the economy's recent turbulent times — lost jobs, sky-high gasoline prices, plunging home values, a free-falling dollar, shaken consumer confidence, a growth slowdown and possibly even a recession — Bush has projected an air of unwavering optimism, even joviality.

He is the nation's biggest economic cheerleader at a time of deep uncertainty.

"The United States is on top of the situation," he declared Monday.

It all has some people shaking their heads. Is there a disconnect here? Does the president get how this might feel to the little guy? Is there a different standard for the big financial community and the strapped homeowner facing foreclosure?

This sort of question dominated presidential spokeswoman Dana Perino's briefings Monday.

Absolutely, the president gets it, she said.

Perino listed steps the administration has been taking to provide relief for homeowners in trouble, such as brokering deals with the mortgage industry for a five-year rate freeze and a 30-day foreclosure pause. She said "help is on the way" in the form of tax rebate checks in May that are part of a $168 billion stimulus package.

She also insisted that the Fed's decision, backed by Bush, to support the purchase of troubled Bear Stearns is a different matter. Bush has rejected bailouts because he says they encourage more people to make poor decisions. But Perino said the broader financial market could follow a company such as Bear Stearns into ruin, causing a ripple effect that demanded bold preventive action.

"A major market disruption would have very damaging consequences and be very painful for everybody, from the small-business owner to the homeowner," Perino said.

In any case, the Fed action on Bear Stearns' behalf doesn't amount to a bailout, she said, because the company's shareholders "are taking large and significant losses in this transaction."

Policy arguments aside, when it comes to presidents and crises, particularly economic ones, perceptions are key.

There was Bush's father, who lost re-election to the White House largely because he was seen as out of touch with the economic problems of regular people. Bill Clinton won with his "I-feel-your-pain" empathy.

And remember Herbert Hoover, infamous for presiding over the onset of the Great Depression? History has slapped him with a laissez-faire legacy even though his administration acted aggressively to try to avert that economic meltdown.

Hoover's reputation was built in part on remarks viewed as too rosy. "The problem is not at all insurmountable in the long run," he said on Oct. 6, 1930, as unemployment, poverty and desperation climbed.

An aide to Hoover's successor, President Franklin Delano Roosevelt, summed up the problem with that approach: "People don't eat in the long run; they eat every day."

Even so, here was Bush making brief remarks to reporters on Monday morning after meeting with his economic advisers: "In the long run, our economy is going to be fine."

He said the same thing Friday in New York, adding "I'm coming to you as an optimistic fellow."

Bush stuck to his focus on "the long run" and it'll-all-be-fine confidence again on Tuesday in Florida, where he tacked remarks aimed at reassuring the public about the economy onto a planned speech on trade.

The president can't seem to help turning upbeat even while trying to to acknowledge the pocketbook pain being felt by many. "One thing is for certain — we're in challenging times. But another thing is for certain — that we've taken strong and decisive action," he said Monday.

Democrats are struggling for the right note, too. They assumed the somewhat awkward position of criticizing Bush for going too far and not far enough at the same time. They want more direct help for homeowners, such as changing the bankruptcy code to allow judges to adjust mortgage rates.

"Now that the president has shown his willingness to bail out Wall Street at taxpayer expense, I hope he will drop his opposition to proposals designed to help ordinary homeowners," said Senate Majority Leader Harry Reid, D-Nev.

Bush rejects the bankruptcy plan and other ideas like it. He wants legislation providing broad mortgage reform instead. "The challenge is not to do anything foolish," he says.

But that challenge applies to his demeanor as well.

Last month, he surprised some people by saying he was unaware that some analysts were predicting $4-a-gallon gasoline by summer.

On Friday, as stocks were tumbling on the developing crisis at Bear Stearns, Bush remarked with a hearty laugh that he had shown up in New York "in an interesting moment." To talk about the nation's economic troubles, he chose an audience of wealthy leaders from the corporate and financial industries who are largely immune to the worries of average Americans. And he went directly from that speech to a fundraising reception in an A-list apartment building on Manhattan's Upper West Side where he collected $20,000 apiece from about 70 GOP donors.

High spirits were on display Monday, too.

With a somber-looking Fed Chairman Ben Bernanke at his side, Bush joshed with reporters after an afternoon meeting of the President's Working Group on Financial Markets — his second publicized economy-related meeting of the day — but offered no substantive remarks.

It's part of the president's job, trying to feel Americans' pain and keep their spirits up at the same time. It's one reason why the word "recession" is unlikely to drop from Bush's lips unless absolutely unavoidable.

In truth, this balancing act is among the president's few powers to steer the country's economy in a different direction. And optimism is the only direction on Bush's compass.