Bush Presses for Bailout, Warns of "Long and Painful Recession"
President George W. Bush urged swift approval of a historic Treasury proposal to bail out ailing financial institutions in a primetime address Wednesday. "Without immediate action … our country could experience a long and painful recession," he said, urging support for a Treasury proposal unveiled last week. The administration's plan would place $700 billion at any one time into the hands of the Treasury to buy up troubled assets; the government could end up buying troubled assets totaling far more than that, however. It’s a price taxpayers must be willing to pay, however, Bush said. He backed his plea with dire warnings of savings and retirement losses, further home foreclosures and closed businesses affecting every U.S. citizen. "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 of some to undermine the financial security of all,” he said. Read his full remarks. The President and his administration face an uphill battle to convince not only everyday American citizens and Congressional Democrats that their proposal is critically needed -- but even rank-and-file GOP members, too. Sen. Richard Shelby, R- Ala. is one critical holdout, and spoke openly of his lack of confidence in the proposed bill to the Wall Street Journal on Wednesday. Failure to act upon this plan, Bush said, will directly affect the everyday American. "The market is not functioning properly. There's been a widespread loss of confidence. And major sectors of America's financial system are at risk of shutting down," the president said, warning of "financial panic." The dire words come as the public is clearly leery that such a vast and far-reaching proposal is really needed: a WSJ/NBC poll found Wednesday that voters are evenly divided on the plan: 31 percent of voters approve the plan, while 33 percent disapprove and 28 percent have no opinion. Both the Democratic and Republican parties nearly mirrored the same approval/disapproval ratio, as well, while self-identified Independents registered the highest levels of disapproval -- 45 percent said the opposed the plan. Once such example of opposition is William Perkin III, even if he's not exactly an "everyday American" in the traditional sense of the word. He turned a $1.25 million profit by going long on shares of Goldman Sachs Group Inc. (GS) last week, betting the firm would turn the corner on its own merits; instead, the stock bumped on news that government would rescue Wall Street. Upset by a plan he told the Wall Street Journal that views as "representing the death of capitalism," he has used his profits to take out advertisements attacking the bailout proposal. Bush, however, defended his proposal as capitalist in Wednesday's address. "Despite corrections in the marketplace and instances of abuse, democratic capitalism is the best system ever devised," Bush argued, essentially taking the well-worn 'save capitalism from the capitalists' stance. Not everyone is convinced the government proposal will generate a loss for U.S. taxpayers. Bill Gross, the well-known chief investment officer of Pacific Investment Management Co. said this week in an op-ed published by the Washington Post that he believes Main Street will benefit from the bail out as well. "The Treasury proposal will not be a bailout of Wall Street but a rescue of Main Street, as lending capacity and confidence is restored to our banks and the delicate balance between production and finance is given a chance to work its magic," Gross wrote. The famed fund manager said he believes that the proposed bailout could yield 7 percent to 8 percent for taxpayers. But profit was not the M.O. for the President in his speech; if anything, fear was. "Our economy is facing a moment of great challenge," he said to close his remarks. "But we've overcome tough challenges before -- and we will overcome this one." By Kelly Curran and Diana Golobay, with contributions from Paul Jackson