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, closed businesses and even "a long and painful recession."
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, America 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.
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 — in dire terms — 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 — 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.
"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.
Earlier Wednesday, Democrats won a key concession from the White House, then sought to scale back the $700 billion price tag, as Republican presidential nominee John McCain inserted himself into high-stakes negotiations on the rescue.
With the administration’s original proposal deeply unpopular in Congress, top House leaders issued an upbeat statement at day’s end saying that they had made progress toward revised legislation. “We are committed to continuing to work cooperatively and on a bipartisan basis to safeguard the interests of the American taxpayers,” said Speaker Nancy Pelosi, D-Calif., and House Republican leader John Boehner of Ohio.
But they offered no timetable on a bailout that the administration said was needed more with each passing day.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke spent most of the day in the Capitol, shuttling between public hearings on the proposal and private meetings with lawmakers.
Presidential politics intruded, as well, when McCain said he intended to return to Washington and called on Bush to convene crisis meetings until an agreement was reached on legislation.
In their statement, Pelosi and Boehner said, “We agree that key changes should be made to the administration’s initial proposal. It must include basic good-government principles, including rigorous and independent oversight, strong executive compensation standards and protections for taxpayers.”
Earlier Wednesday, Paulson agreed to demands from critics in both parties to limit the pay packages of Wall Street executives whose companies would benefit from the proposed bailout.
“The American people are angry about executive compensation and rightfully so,” Paulson told the House Financial Services Committee. “We must find a way to address this in the legislation without undermining the effectiveness of the program.”
The issue has been a much-debated point in the struggle to win congressional approval of the historic rescue of the financial industry, though the “golden parachute” money involved would be relatively insignificant compared with the huge sums being talked about.
At the same time, Democrats were asking the Bush administration to dramatically cut the size of the rescue and then come back to Congress later if they need more.
Under that plan, which was still emerging, Congress would approve a fraction of what Bush is asking for — perhaps $150 billion or $200 billion — to allow the government to begin rescuing tottering financial companies.
Pelosi has privately suggested the idea to Paulson, according to officials who spoke on condition of anonymity because the negotiations are private.
Sen. Chuck Schumer, D-N.Y., pressed Paulson on the idea Tuesday and was told it would be a “grave mistake.”
But some Republicans said they support it as well. “It’s highly appropriate for them to come back to us once they see and we see how this is working,” said Sen. Bob Corker, R-Tenn.
Rep. Barney Frank, D-Mass., said Wednesday, “Ultimately $700 billion has to be available but ... they are making progress about how to give people some assurance that it is not going to go to $700 billion in one fell swoop.”
Frank, who as chairman of the Financial Services Committee has taken a lead in the negotiations, said Paulson also “accepts the fact” that the bill will give the government an ownership stake in the companies whose bad debts are taken over, a Democratic goal.
The heart of the unprecedented plan, dramatically unveiled less than a week ago, involves the government buying up sour assets of tottering financial firms to keep them from going under and to stave off a potentially severe recession and the accompanying lost jobs and further home foreclosures.
Congressional Democrats dismissed McCain’s dramatic announcement as a political ploy and said his involvement in the talks six weeks before the elections would only muddle the extraordinarily sensitive debate.
“With all due respect to my friend John McCain, we’re doing just fine. We should not have presidential politics enter what we’re doing here,” said Sen. Harry Reid, D-Nev., the majority leader. He added that McCain “is trying to divert attention from his failing campaign.”
Lawmakers in both parties have strenuously objected to the plan over the past two days, Republicans complaining about federal intervention in private business and Democrats pressing to tack on help for beleaguered homeowners.
Many Republicans and Democrats appear to be more open to legislation, although on different terms than the White House has proposed.
Polls in the last several days have provided mixed messages about the public’s view.
An ABC News-Washington Post poll said Wednesday the public is split about evenly over whether it supports federal “steps” to handle the financial crisis. In a survey released Tuesday by the nonpartisan Pew Research Center, there was nearly two-to-one support for the government “potentially investing” billions to try securing the markets.
Democrats insist Republican lawmakers must stand up for their own president’s proposal, but they appear anything but eager to do so.
“It’s a tough sell to most of our members,” said Rep. Tom Davis, R-Va., after a closed-door meeting with Paulson and Bernanke. “It’s a terrible plan, but I haven’t heard anything better.”
Compounding the administration’s challenge, Republicans and Democrats both say Bush has lost credibility, particularly in cases where he argues there will be dire consequences if Congress doesn’t act.
“They sold the war, they sold the stimulus package and some other things. It’s the ’wolf at the door”’ argument, Davis said.