By Dan Eggen
Washington Post Staff Writer
Wednesday, July 16, 2008
President Bush sought yesterday to reassure shaky markets and frightened consumers about worsening financial conditions, and he blamed congressional Democrats for not acting quickly enough to tackle the nation's economic troubles.
And with one large California bank already taken over by the federal government, Bush even offered a brief tutorial on the mechanics of bank runs. "I happened to witness a bank run in Midland, Texas, one time," Bush told reporters at the White House. "I'll never forget the guy standing in the bank lobby, saying, 'Your deposits are good. We got you insured. You don't have to worry about it if you got less than $100,000 in the bank.' The problem was, people didn't hear."
"My hope is, is that people take a deep breath and realize that their deposits are protected by our government," he added.
A meditation on the dangers of banking panics would be unusual for any president, but particularly for Bush, who has generally given wide latitude to his Treasury secretary, Henry M. Paulson Jr., and to Federal Reserve Chairman Ben S. Bernanke in responding to a series of escalating financial crises this year.
But Bush strode prominently into the middle of the economic debate yesterday, spending more than 40 minutes at a White House news conference talking primarily about the financial markets, the housing crisis, high gasoline prices and the administration's plans to turn things around.
The appearance -- Bush's first full press conference in nearly three months -- underscores the extent to which economic problems are bedeviling the White House. With just over six months left in office, and with his approval rating at a new low in Washington Post-ABC News polling, Bush sought to balance his trademark optimism with assurances that the economic troubles facing Americans will subside.
He said that "it's been a difficult time" for American families but that "we will come through this challenge stronger than ever before." There is "no short-term solution" to energy problems, Bush said, but it is "urgent" for Congress to lift its ban on offshore oil drilling. He said the unique status of mortgage giants Fannie Mae and Freddie Mac required a "special step" to show that the government will stand behind the companies' mortgages, but he added that conventional private enterprises should not expect a government bailout.
"I think the system basically is sound, I truly do," Bush said. "And I understand there's a lot of nervousness. . . . But the economy is growing, productivity is high, trade is up, people are working. It's not as good as we'd like, but . . . to the extent that we find weakness, we'll move."
The balancing act extended to wars abroad, as Bush hailed increasing success in Iraq while acknowledging that security conditions have deteriorated in Afghanistan.
"One front right now is going better than the other, and that's Iraq, where we're succeeding, and our troops are coming home based upon success," Bush said. "Afghanistan is a tough fight. . . . And it's really important we succeed there, as well as in Iraq. We do not want the enemy to have safe haven."
Many of Bush's remarks were focused on scolding Democrats for not approving his economic and energy proposals. They came shortly before his veto of a Medicare bill, which was overridden by bipartisan votes in the House and Senate.
"Politics is just choking good sense," Bush complained at one point while discussing Democratic opposition to a free-trade pact with Colombia.
"People say, 'Aww, man, you're running out of time, nothing is going to happen,' " Bush said. ". . . What can we get done? We can get good housing legislation done. We can get good energy legislation done. We can get trade bills done. I mean, there's plenty of time to get action with the United States Congress, and they need to move quickly."
At the same time, Bush rejected Democratic demands to tap emergency oil reserves and suggested that he was not inclined to consider a second stimulus package during his term. Bush said lawmakers should wait to assess the impact of the $168 billion stimulus package passed in February, which included checks of up to $600 per person that are still being distributed.
House Speaker Nancy Pelosi (D-Calif.) and other Democrats said yesterday that they planned to move forward with a second stimulus package that would include spending for roads, expanded unemployment benefits, home-heating assistance for low-income families and aid for states struggling with budget deficits. Rep. Roy Blunt (R-Mo.) responded that "the best way to stimulate our economy would be to take meaningful steps to reduce the price at the pump."
Bush and other Republicans argue that one way to lower gas prices is to open up most of the coastal United States to offshore oil drilling. Bush lifted a presidential ban on such drilling Monday, but Congress would have to remove its own ban for exploration to proceed.
"I readily concede that, you know, it's not going to produce a barrel of oil tomorrow, but it is going to change the psychology that demand will constantly outstrip supply," Bush said of his proposal.
One reporter asked Bush whether he recalled a February news conference when the president said he was not aware that gas prices were predicted to exceed $4 a gallon.
"Aware of it now," Bush responded.