Bush Is Upbeat About Economy's Prospects

Rep. Rahm Emanuel (Ill.), a top House Democrat, is pushing his party to make the economy more of an issue in the coming months. He said Bush has adopted a complacent approach, as did his father, President George H.W. Bush. "You have got a major financial crisis. You have got a major mortgage and home-value crisis. You have rising energy and health-care costs. And, for the first time since the Depression, a negative savings rate," Emmanuel noted. "Outside of that, [Bush] wants to tell you everything is okay."

But the president has been careful to voice empathy for the average worker. "I'm concerned about the fact that Americans see their costs going up," Bush said yesterday. "I know Americans are concerned about whether or not their neighbor may stay in their house. And so we're dealing with these issues."

Bush allies on the Hill appear to be standing behind the president on this issue. "This economy looks considerably better than what he was dealing with at the outset" of the administration, said Rep. Tom Cole (Okla.), chairman of the National Republican Congressional Committee. "I would still argue that it is still a Republican strength. There is really no Democratic answer except higher taxes and protectionism, and it's hard to sell that."

The Bush administration's approach to the mortgage crisis has been a patchwork of proposals that offer no "silver bullet," in the words of Treasury Secretary Henry M. Paulson Jr., who has emerged as the administration's point person on the economy. Foreclosure rates rose rapidly throughout 2007, but, as recently as July, Paulson described the problems in the housing market as "largely contained."

It was not until Aug. 31, after the problems had worsened and while financial markets were in full crisis mode, that the president announced policies meant to alleviate the crunch. The ideas he proposed then -- making a federal loan insurance program better able to help borrowers refinance into affordable mortgages, and changing a tax law that made it hard for people to renegotiate with their lenders -- were widely embraced.

Congress passed the tax change this week. But the proposed changes for the Federal Housing Administration have stalled on Capitol Hill. Differing versions of the bill have been passed overwhelmingly by the House and the Senate, but the two chambers have not been able to reconcile the differences.

Democrats in Congress have sharply criticized the administration for responding too timidly, but their policy disagreements are more subtle than the heated rhetoric would suggest.

In a speech this week, Sen. Charles E. Schumer (D-N.Y.) said the administration "cannot step up to the plate to solve major problems." But of the seven policies he has proposed, the administration is in general agreement -- though with differences on many details -- with six.

For example, Schumer advocated increasing the size of the loans that government-sponsored finance companies Fannie Mae and Freddie Mac can fund. Paulson has said that he would support such a move, as long as it includes a stronger regulator for the companies.

Rep. Thomas M. Davis III (R-Va.), who has been supportive of Bush's handling of the economy, said it is difficult to design the right approach to an uncertain economic situation. Of the White House, he said: "They are nervous that we will do more than we need to do. In a month, we will get more data. The real question on the subprime crisis is 'How deep does it reach?' "

Polling director Jon Cohen contributed to this report.