Part Econ 101 lecture and part dire warning, President Bush took to the airwaves during prime time on Wednesday night to issue the grim assessment that if Congress doesn't act soon to fix the financial crisis, "our entire economy is in danger."
The unusually blunt words from the president — who as recently as July was saying that the U.S. economy was "basically sound" — came as Congress struggles to agree on the proposed $700 billion bailout plan to help the financial markets. The plan has drawn widespread criticism from Republican lawmakers and, according to reports, a majority of Americans.
"This is an extraordinary period for America's economy," Bush said. "Over the past few weeks, many Americans have felt anxiety about their finances and their future. I understand their worry and their frustration. ... We're in the midst of a serious financial crisis, and the federal government is responding with decisive action."
Bush then went on to spend a good portion of the 12-minute address explaining how the economy got so bad and cautioning lawmakers that if they don't act soon they risk a domino effect of economic catastrophe that could wipe out retirement savings, cause a spike in home foreclosures and lead to lost jobs and failed businesses.
"Without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold," said Bush. "Ultimately, our country could experience a long and painful recession. ... We must not let this happen."
On the same day that Republican presidential candidate Senator John McCain said he was suspending his campaign, as well as asking for the postponement of Friday night's first presidential debate, Bush said he was summoning McCain and Democratic presidential candidate Senator Barack Obama to Washington to sit down with him and Congressional leaders on Thursday (September 25) to work on a compromise bill.
While most in Congress have agreed that some decisive action must be taken to help boost the sagging economy — which some economist have predicted is on the verge of a potentially devastating collapse — many have balked at the enormous price of Bush's plan and expressed dismay at the aggressive intervention by the government into a private-sector problem. Some have even likened the measure to socialism. By some assessments the bailout could cost every American man, woman and child $2,000.
Bush attempted to assure skeptical lawmakers that while he's not enthusiastic about putting taxpayer money up to help bail out businesses that made poor investments, he stressed that the plan aims to prop up the entire financial system.
"This rescue effort is not aimed at preserving any individual company or industry," he said. "It is aimed at preserving America's overall economy. It will help American consumers and businesses get credit to meet their daily needs and create jobs. And it will help send a signal to markets around the world that America's financial system is back on track."
While private-sector intervention is a highly unusual move for Bush, even more unusual was the joint statement issued by Obama and McCain Wednesday evening, in which they too urged Americans to support a bailout bill. "The American people are facing a moment of economic crisis," read the statement. "No matter how this began, we all have a responsibility to work through it and restore confidence in our economy. The jobs, savings and prosperity of the American people are at stake. Now is a time to come together — Democrats and Republicans — in a spirit of cooperation for the sake of the American people."
Bush asserted that he still believes in the free-market system — in which the market is allowed to regulate itself based on supply and demand — and that his "natural instinct" is to oppose this kind of government intervention.
"I believe companies that make bad decisions should be allowed to go out of business," he said. "Under normal circumstances, I would have followed this course. But these are not normal circumstances. The market is not functioning properly. There has been a widespread loss of confidence, and major sectors of America's financial system are at risk of shutting down. The government's top economic experts warn that, without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold."
Bush was adamant that any rescue plan would be designed to protect taxpayers by making sure failed executives do not receive large compensation packages, giving taxpayers an equity stake in some of the firms so that the government can profit if the companies bounce back in the future and setting up a bipartisan board to oversee the plan's implementation.
"In the long run, Americans have good reason to be confident in our economic strength," Bush concluded. "Despite corrections in the marketplace and instances of abuse, democratic capitalism is the best system ever devised. ... Our economy is facing a moment of great challenge, but we've overcome tough challenges before, and we will overcome this one. I know that Americans sometimes get discouraged by the tone in Washington and the seemingly endless partisan struggles, yet history has shown that, in times of real trial, elected officials rise to the occasion."