- The Washington Times - Saturday, September 20, 2008

President Bush on Saturday defended his decision to authorize a massive government intervention in the economy which was revealed in meetings on Capitol Hill to be a $700 billion deal and rejected the idea that allowing the market to self-correct would have worked.

Creative destruction in my mind wouldnt work, the president said, responding to criticisms by some free market conservatives that the governments response is a violation of key core principles.

Mr. Bush also said that in his conversations with congressional leaders, he found a common understanding of how severe the problem is and how it is necessary to get something done quickly, and I think we will.

The White House would like to nail down an agreement no later than Sunday, to assure investors in global markets that will be opening up by Sunday evening.

Speaking to reporters during a joint press conference at the White House with Colombian President Alvaro Uribe, Mr. Bush said that the governments decision to buy up bad debt was a big package because this is a big problem.

There is going to be hundreds of billions of dollars at risk, Mr. Bush said, adding that he believes that much of the money will be earned back over time.

The president voiced confidence in the plan, devised by Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben Bernanke.

I believe this is going to work, he said. In the long run were going to be fine Well get through this.

As staffers from the Federal Reserve and Treasury Department sat down Saturday morning with staffers from the Senate Banking Committee and House Financial Services Committee, it was revealed that the price tag for the deal that was announced Friday had gone up to $700 billion.

Reports Friday had the price at $500 billion.

The 850-word proposal under discussion gives the Treasury Secretary broad powers, which expire in two years, to buy up mortgage-related assets from any financial institution having its headquarters in the United States.

Mr. Bush justified the momentous and jaw-dropping intervention by repeating and amplifying the point made Friday, that the economic crisis was going to spread quickly from Wall Street to Main Street.

This wasnt going to be contained to just the financial community. This problem would spread to the average citizen, Mr. Bush said. Im worried about people being able to send their kids to college or to be able to afford their homes.

You bet its big because it needed to be big.

Im sure there are some of my friends out there saying, I thought this guy was a market guy. What happened to him? Mr. Bush said. Well, my first instinct wasnt to lay out a huge government plan.

My first instinct was to let the market work until I realized, upon being briefed by the experts of how significant this problem became. And so I decided to act and act boldly.

I told our people I dont want to be timid in the face of a problem that could affect the working person, he said.

Mr. Uribe met with Mr. Bush to discuss the stalled free trade agreement between his country and the U.S., which has been held up by Democrats in Congress.

Mr. Bush said that the agreement is good for the U.S. economy and for U.S. jobs, and called on Congress to consider including it in some of the legislation they pass before the end of the year.

LOAD COMMENTS ()

 

Click to Read More

Click to Hide