Bush tries to settle fears over economy

President Bush and top lawmakers on Tuesday sought to settle jittery financial markets and anxious Americans, insisting that facts, not fear, need to drive efforts to stimulate the flagging economy.

Mr. Bush, acknowledging that times are tough, expressed confidence in the economy´s foundation despite a report that shows inflation rising at the fastest pace in more than a quarter-century and the ongoing assault of record gas prices, plunging home values and the prospect of more bank failures.

“But our economy’s continued growing, consumers are spending, businesses are investing, exports continue increasing and American productivity remains strong. We can have confidence in the long-term foundation of our economy, and I believe we will come through this challenge stronger than ever before,” Mr. Bush told reporters during his first White House press conference since late April.

Democratic leaders on Capitol Hill renewed calls for a second stimulus package, and Senate Banking, Housing and Urban Affairs Committee Chairman Christopher J. Dodd, Connecticut Democrat, appealed for calm.

“It is important to distinguish between fear and facts. In our markets today, far too many actions are being driven by fear and ignoring crucial facts,” Mr. Dodd said.

After meeting with economists, House Speaker Nancy Pelosi, California Democrat, credited recent tax rebates of $600 to individuals and $1,200 for married couples with helping the economy and said Congress will consider similar efforts.

Mr. Bush showed little interest, and Senate Majority Leader Harry Reid, Nevada Democrat, was cautious about following too quickly on the $168 billion measure passed in February, saying the economy will be better aided by pouring money into infrastructure development, like bridges, highways and dams, and for renewable energy.

“We’re always open-minded to things, but … let’s see how this stimulus package works,” Mr. Bush said.

Nonetheless, the Dow Jones Industrial Average closed below 11,000 for the first time in two years, and leaders in both parties continued to scramble to stem the election-year economic malaise that is turning up the political heat.

Using a personal story about seeing a run on the bank in his hometown of Midland, Texas, Mr. Bush said he understands nervousness but stressed that the banking system is “basically sound” and a depositor’s money is insured by the government up to $100,000.

“I’ll never forget the guy standing in the bank lobby say, ‘Your deposits are good. We got you insured. You don’t have to worry about it, if you’ve got less than 100,000 in the bank.’ The problem was, people didn’t hear,” Mr. Bush said.

“And there’s a - you know, became a nervousness. My hope is, is that people take a deep breath and realize that their deposits are protected by our government,” he said.

On Monday, banking stocks plummeted, and in California, customers lined up outside IndyMac Federal Bank to withdraw their deposits.

Mr. Dodd said concerns about the solvency of Fannie Mae and Freddie Mac - who hold or guarantee about half of the nation’s roughly $10 trillion in mortgages - are overblown.

“Fannie Mae and Freddie Mac have core strengths that are helping them weather the stormy seas of today’s financial markets. They are adequately capitalized. They are able to access the debt markets,” he said.

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