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Administration urges patience on bailout

- The Washington Times - Wednesday, October 22, 2008

A day after dropping its opposition to a second stimulus bill, the White House said its $700 billion Wall Street rescue plan should be given time to work before more government intervention to jump-start the economy is tried.

"We have a lot of money that's in the pipeline," White House spokeswoman Dana Perino told reporters Tuesday. "It's going to take a little while to work, but we think that's the best way to stimulate the economy right now.'

The administration was not proposing a second economic-stimulus package, Mrs. Perino said.

Mrs. Perino said she wasn't aware of any negotiations between the administration and congressional Democrats who are pushing for a second stimulus package — reversing comments that she made Monday that the administration was "continuing to have conversations with Congress" on the matter.

The White House comments were made as investors digested dozens of corporate earnings reports that signaled little easing of the weakness gripping the economy. The Dow Jones Industrial Average fell 231.77 points, or 2.5 percent, to 9,033.66.

Broader indexes also slumped, as the Nasdaq Composite Index dropped 73.35 points, or 4.14 percent, to 1,696.68, and the Standard & Poor's 500 Index fell 30.35 points, or 3.08 percent, to 955.05.

The government last week made the first investment of $125 billion to purchase stakes in nine of the country's biggest banks. The money was part of a $700 billion government rescue program for the financial system that Congress passed Oct. 3.

House Speaker Nancy Pelosi, California Democrat, has said Congress may convene after the Nov. 4 elections to pass a stimulus package that could cost at least $150 billion that could include tax cuts, aid for state and local governments and an extension of unemployment benefits.

The administration remains "open to listening to all good ideas that people want to put forward," Mrs. Perino said, but added that "so far we have not seen that."

"We've seen a lot of campaign talking points but nothing that would actually stimulate the economy," she said. "I don't think there was something that could even pass the current Congress."

The White House said it opposes any new plan that would include a tax increase.

Mrs. Perino made the comments a day after the Federal Reserve Chairman Ben S. Bernanke urged Congress to pass a fiscal stimulus to counter what he said could be a long and deep downturn in the economy.

"With the economy likely to be weak for several quarters and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Mr. Bernanke told the House Budget Committee on Monday.

But the head of the central bank cautioned Congress not to abandon all fiscal discipline in its attempts to prop up the economy.

The Federal Reserve said Tuesday that it will start buying short-term debt from companies in its latest effort to loosen the credit logjam that has hobbled lending and threatens to plunge the country into a deep recession.

The central bank will tap its Depression-era emergency powers to buy up to $540 billion of commercial paper - the crucial short-term loans on which many companies rely for day-to-day operations - from money market mutual funds.

The central bank's new program, called the Money Market Investor Funding Facility, is designed to provide liquidity to money market funds by backing purchases of short-term debt, including certificates of deposit and commercial paper. The purchases would be limited to debt that expires in three months or less.

• This article is based in part on wire service reports.

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