With his financial rescue plan on the rocks in Congress, President Bush asked the nation Wednesday evening to put aside politics and doubt and trust him once again in an emergency.
After describing in some detail the complicated workings of finance that led to the crisis, Bush said that failure to act on the rescue risked "a long and painful recession. Fellow citizens, we must not let this happen." In an echo of past addresses that rallied the nation after Sept. 11, and then again to support the Iraq war, Bush asked for the public's help in pressing Congress to quickly pass his $700 billion plan to buy up mortgage securities, a plan that has aroused sharp opposition from Republicans as well as Democrats.
In a bow to his waning influence less than six weeks from Election Day, Bush announced that presidential candidates Barack Obama and John McCain would join congressional leaders at the White House today to hear his case for the bailout. A joint statement by the two campaigns was released shortly before Bush's address, calling the current plan "flawed," but asking both parties to come together to address the crisis. "The effort to protect the American economy must not fail," it read.
The message served in part to put a bipartisan face on a day full of political maneuvering and image control surrounding the bailout project, an issue that has come to dominate the race. Earlier on Tuesday, McCain announced that he had decided to suspend his campaign and return to Washington to help shape the bailout plan, although how exactly he planned to insert himself into the ongoing negotiations was left unclear. McCain said this work might mean postponing the upcoming presidential debate, currently scheduled for Friday in Oxford, Miss.
Appearing in Clearwater, Fla., later in the day, Obama rejected the suggestion that the financial crisis need pre-empt the debates. "This is exactly the time when the American people need to hear from the person who, in approximately 40 days, will be responsible for dealing with this mess.... It is going to be part of the president's job to deal with more than one thing at once." But amid the campaigns' back-and-forth, it remained unclear whether the show would go on.
Behind the scenes, the Obama and McCain camps and their surrogates in Congress traded accusations that each side was seeking to politicize the bailout. Rep. Barney Frank, the chairman of the House Financial Services Committee, called McCain's decision to pull out of the debate "the longest Hail Mary pass in the history of either football or Marys."
South Carolina Sen. Lindsey Graham, a McCain adviser, suggested that the two candidates hold their debate next week in St. Louis, site of the scheduled vice presidential debate -- a change that would also have the effect of giving Alaska Gov. Sarah Palin another week to prepare for her most extensive test on the national stage.
McCain has become increasingly critical of the bailout plan as a wasteful payoff for Wall Street. Obama has also voiced criticisms, blaming Republican policies for the crisis, but he has seemed more inclined to support a plan along the lines of the one proposed by the Bush administration.
While many lawmakers oppose the bailout in the general terms championed for the last week by Treasury Secretary Henry Paulson Jr., the terms of the negotiations remain fluid and all involved have powerful incentives to avoid the blame for derailing some form of a bailout, which most economists say is needed to avert a long and perhaps worldwide recession.
Sen. Charles Schumer, D-N.Y., one of the bailout negotiators, said that the administration and congressional Democrats and Republicans are divided into three camps with serious differences about many aspects of the plan. Administration officials are pushing for a final vote by the weekend, but it appears that it would be several more days, at the earliest, before that could be completed. Financial markets were calm Wednesday as the delay in the bailout became national news.
To break the stalemate, some lawmakers are suggesting that Congress approve an initial $150 billion of the proposed $700 billion. There were conflicting reports Thursday morning that Democratic leaders had accepted administration proposals on curbing executive pay. The two sides were near agreement on creation of an advisory board to oversee the extraordinary powers to be granted the Treasury Secretary under the plan, and on several provisions to assist homeowners facing foreclosure. Meanwhile, some Democratic leaders say they would drop demands to amend bankruptcy laws to allow renegotiation of mortgages.
On Wednesday, the Democrat-appointed director of the nonpartisan Congressional Budget Office testified to the House that the bailout, as designed, might actually force more bankruptcies and further destabilize the financial system. But Peter Orszag didn't condemn the plan, and even suggested it might be necessary to risk such adverse effects if the alternative was certain calamity. Federal Reserve officials say constrained lending by banks is severely hampering the financial system.