Thursday, September 25, 2008

Bush and Candidates to Meet on Bailout

By SHERYL GAY STOLBERG and DAVID M. HERSZENHORN

WASHINGTON — President Bush appealed to the nation Wednesday night to support a $700 billion plan to avert a widespread financial meltdown, and signaled that he is willing to accept tougher controls over how the money is spent.

As Democrats and the administration negotiated details of the package late into the night, the presidential candidates of both major parties planned to meet Mr. Bush at the White House on Thursday, along with leaders of Congress. The president said he hoped the session would “speed our discussions toward a bipartisan bill.”

Mr. Bush used a prime-time address to warn Americans that “a long and painful recession” could occur if Congress does not act quickly.

“Our entire economy is in danger,” he said.

On Capitol Hill, Democrats said that progress toward a deal had come after the White House had offered two major concessions: a plan to limit pay of executives whose firms seek government assistance, and a provision that would give taxpayers an equity stake in some of the firms so that the government can profit if the companies prosper in the future. Details of those provisions, and many others, were still under discussion.

Mr. Bush’s televised address, and his extraordinary offer to bring together Senator Barack Obama, the Democratic presidential nominee, and Senator John McCain, the Republican, just weeks before the election underscored a growing sense of urgency on the part of the administration that Congress must act to avert an economic collapse.

It was the first time in Mr. Bush’s presidency that he delivered a prime-time speech devoted exclusively to the economy. It came at a time when deep public unease about shaky financial markets and the demise of Wall Street icons such as Lehman Brothers has been coupled with skepticism and anger directed at a government bailout that could become the most expensive in American history.

The administration’s plan seeks to restore liquidity to the market and restore the economy by buying up distressed securities, many of them tied to mortgages, from struggling financial firms.
The address capped a fast-moving and chaotic day, in Washington, on the presidential campaign trail and on Wall Street.

On Capitol Hill, delicate negotiations between Treasury Secretary Henry M. Paulson Jr. and Congressional leaders were complicated by resistance from rank-and-file lawmakers, who were fielding torrents of complaints from constituents furious that their tax money was going to be spent to clean up a mess created by high-paid financial executives.

On Wall Street, financial markets continued to struggle. The cost of borrowing for banks, businesses and consumers shot up and investors rushed to safe havens like Treasury bills — a reminder that credit markets, which had recovered somewhat after Mr. Paulson announced the broad outlines of the bailout plan last week, remain under severe stress, with many investors still skittish.

Senator Christopher J. Dodd, Democrat of Connecticut and chairman of the banking committee, said a deal could come together as early as Thursday. “Working in a bipartisan manner, we have made progress,” the House speaker, Nancy Pelosi, and Representative John A. Boehner, the Republican leader, said in a joint statement.

“We agree that key changes should be made to the administration’s proposal. It must include basic good-government principles, including rigorous and independent oversight, strong executive compensation standards and protections for taxpayers.”

Mr. Bush used his speech to signal that he was willing to address lawmakers’ concerns, including fears that tax dollars will be used to pay Wall Street executives and that the plan would put too much authority in the hands of the Treasury secretary without sufficient oversight.

“Any rescue plan should also be designed to ensure that taxpayers are protected,” Mr. Bush said. “It should welcome the participation of financial institutions, large and small. It should make certain that failed executives do not receive a windfall from your tax dollars. It should establish a bipartisan board to oversee the plan’s implementation. And it should be enacted as soon as possible.”

The speech came after the White House, under pressure from Republican lawmakers, opened an aggressive effort to portray the financial rescue package as crucial not just to stabilize Wall Street but to protect the livelihoods of all Americans.

But the White House gave careful thought to the timing; aides to Mr. Bush said they did not want to appear to have the president forcing a solution on Congress.

On Capitol Hill, Mr. Paulson, facing a second day of questioning by lawmakers, this time before the House Financial Services Committee, tried to focus as much on Main Street as Wall Street.
“This entire proposal is about benefiting the American people because today’s fragile financial system puts their economic well being at risk,” Mr. Paulson said. Without action, he added: “Americans’ personal savings and the ability of consumers and business to finance spending, investment and job creation are threatened.”

But it was the comments of Mr. Paulson, a former chief of Goldman Sachs, about limiting the pay of executives that signaled the biggest shift in the White House position and the urgency that the administration has placed in winning Congressional approval as quickly as possible.

“The American people are angry about executive compensation, and rightly so,” he said. “No one understands pay for failure.”

Officials said the legislation would almost certainly include a ban on so-called golden parachutes, the generous severance packages that many executives receive on their way out the door, for firms that seek government help. The measure also is likely to include a mechanism for firms to recover any bonus or incentive pay based on corporate earnings or other results that later turn out to have been overstated.

Democrats were also working to include tax provisions that would cap the amount of an executive’s salary that a company could deduct to $400,000 — the amount earned by the president.

At the same time, Congressional Democrats said they were prepared to drop one of their most contentious demands: new authority for bankruptcy judges to modify the terms of first mortgages. That provision was heavily opposed by Senate Republicans.

In addition, Democrats also are leaning toward authorizing the entire $700 billion that Mr. Paulson is seeking but disbursing a smaller amount, perhaps only $150 billion, to start the program, with future funds dependent on how well it is working.

Representative Barney Frank of Massachusetts, the lead negotiator for Congressional Democrats, said they also planned to insert a tax break to aid community banks that have suffered steep losses on preferred stock that they own in the mortgage finance giants Fannie Mae and Freddie Mac.

That change is in addition to others that already have been accepted by Mr. Paulson that would create an independent oversight board and require the government to do more to prevent foreclosures.

IN CLASS DISSCUSSION:
-Should Obama and McCain cancel the scheduled debate?
-Why might/might not the candidates meet with President Bush?

-Should executives at companies have salaries lowered after they are bailed out by the government?

-Alex D- It doesn’t make sense to bail out failing companies, wouldn’t they just make less money?

-(Class consensus) If we let companies go bankrupt, economy will crash, jobs will be lost, wages down, more debt.

-Is putting taxpayer money into buyout a temporary fix up or a solution? –Mr. Brown
-Stricter laws on businesses, make us seem communist, because government controls business. –John Ray

-McCain may be trying to block debate because Obama has advantage on National television, also to show he cares about the economy. If Obama doesn’t want to cancel, he can be accused of not caring enough about the economy. –Matt F.

-There’s a lot of days from now till the election, things will change. - Alex D.

-McCain IS ready for the foreign policy debate, he said he was. –Apeksha

-I believe that it’s all a part of the political campaign, when McCain cancels the debate. –Rajvir

-McCain does care and he is showing that. –Sanaa

-Can Congress change recess? –Alex

-A debate is only one day, Great Depression wasn’t fixed in one day. We need to know the plans of the economy from the candidates NOW. –John Ray

-Obama should us this economic recession to show what he can do about the economy.- Amir! (yes he spoke)

-Karamvir- McCain is trying to put Obama in a bad situation where he has to react.

-Weeks ago, the republicans and McCain were telling us that there was nothing wrong with the economy, now look at what happened. It’s all a part of his Maverick reputation where he stands pat on issues and comes across as courageous yet stubborn. –Matt F.

-Debate only takes a few hours, why can’t McCain take the time to just do the debate then get back to Congress to work on the bill? –Hemant

-The Republicans should have done something about the economy already. –John Ray

29 comments:

n.demetrius said...

I think that the topic for the debate should be about the economy. We're electing a new president soon and we need to hear what each sides plan for this is going to be and thats important.

amir.p said...

After hearing everybody's thoughts and comments in class I agree with
what JohnRay had said "McCain does not seem ready or prepared for the debate". If McCain wants a bailout,
doesn't he think that he is turning
his voters against him. If McCain can't come up and tell what he can do to change or have an affect on
the economy, he is giving Obama a great advantage and getting people on Obama's side. To me, I believe that President Bush has given both Barack Obama and John McCain a task, where us people can see, which candidate can support America and which cannot.


amir.p

Anonymous said...

I agree with Matt F. when he said that the republicans are just reacting (third to last quote posted), weeks ago there was nothing on the economy but now McCain is canceling the debate to "fix" the problem. It seems as if McCain is using the financial crisis as publicity.

(Is putting taxpayer money into buyout a temporary fix up or a solution? -Mr. Brown)
->
It seems to be a temporary fix, we're going to have to pay off a trillion or more dollars in debt and middle class America will suffer.

-N. Budhu

R. Kaur said...

As I have said in class, I believe this has everything to do with a political campaign, because if they had to help the economy crises they could have 4years ago. Our economy is not a shocking surprise, for a few years we knew this was coming. And if they had stepped up then and tried to do something then they might have had better chances to win the vote of presidency . McCain is trying to stop the debate even though its his vote because then people are going to believe that yes, he’s actually worried. Because if he were to stop the debate when it is Obama’s debate topic then they are going to think he is only doing it because he is not prepared for it. That will make it force for the McCain campaign.

Anonymous said...

If i was to talk to the congress, I would tell them "enough is enough". I don't think it's fair that American is paying for the banks mistakes.

a. hughey said...

I thought it was funny when Matt F. stated that McCain could either really care about our economy or could just be bailing out becuase he knows that Obama is a better speaker. Personally i cant even tell you which one i agree with. Part of me wants to say that McCain is bailing and part of me wants to say that he really cares. The election this year is going to be a very hard one and im glad that i dont have to be apart of it for now...

qnz1stladii said...

I agree with matt F's first statement . If Obama doesn't agree to cancel the debate it will seem as if he doesn't care about the economy ,and right now the economy is very bad. But McCain could have done something about the economy already . Why is it that he needs that specific day to all of a sudden care.Bush is a republican and were in this problem so what's the difference with this one? If he is ready for the debate then let it go on, you can't fix the economy in one night.

-CMartinez

L. molina said...

I believe that both presidential candidates should have the debate because by canceling their debate isn't going to make a change to the economy. Both McCain and Obama should go to the debate and show us what they got in mind to help the economy. They should already know what they are going to do once they step in the office in order for our economy to go back to the way it used to be. It is going to take time for our economy to go back to normal but for now we need to start knowing what the candidates are capable of.

Melissa B said...

i agree with john ray wen he said that that the debate is only one day and this situation can not be solved in one day this is going to take time to fix the economy in the state its in and where it might lead if we dnt fix it.
the situation with Mccain and how he just wants to cancle the debate because he not ready for it that might be true expecially since a few weeks ago he said that theres nothing wrong with the economy.

Anonymous said...

I don't really think they should cancel the debate,they should just do both things. I agree with Rajvir/Sana when they said if the goverment knew for so long about the economy and both canidates knew about it why didn't they do anything to avoid it.Both these canidates need to work and help with the economy because then America is going to be in some real serious trouble and it's going to be hard to get out of it.

-j.canales

U. Cheema said...

It was John McCain who invited Obama to 10 of his town hall meetings to answer questions which Obama refused. Now he himself isn't willing to debate. Knowing that he's gonna have to answer the tough questions he's backing out until the bill is passed for a bailout.

As much as people say Obama has an advantage on National Television, well when it comes to debating he doesn't do extremely good. With his speeches he does way better.

The candidates shouldn't meet with Bush because they weren't involved in the negotiations. Secretary Paulson Ben Bernanke Chairman of the Federal Reserve and Rep. Barney Frank and other key members of Congress have already done that in the first place and are waiting for Congress to pass it. What are they going to do different even if they are in Washington skipping the debate? They aren't going to be very influential in getting both parties to agree to a bipartisan bill. The meeting held today in the White House should be enough. Nothing new came out of today's meeting anyway.

t alexander said...

I think McCain is trying to show off the peoples that he cares about the debate. He should take advantage about economy. They should show us what they can do about it. I think it's all about the political campaigh. The republicans should have done anything about the economy.

H.Sugrim said...

If McCain really cared about our economy, then he shouldn't try to cancel the debate. He should go and share his plan at the debate. America has been waithing for this night to help them choose a president that could bring America out of this crisis. So we need to hear what their plan is to fix America. This debate is a major part of which candidate America wants.

a vora said...

-Should Obama and McCain cancel the scheduled debate?


I don't think that Obama & McCain should cancel the debate. I think that the "show must go on. . " Basically as I said in class McCain is trying to prove that he would be a great president because he wants to finish all the problems etc. As always there are to sides. Some might think that wow he really cares about America, others might just see through this.


-A vora

K.WESTON said...

I agree and disagree with sanna when she said that “McCain does care and he is showing that.” The reason for me disagreeing with this is because a debate only takes up a couple of hours. You can take a couple ours out of what’s happening to try to fix it by debating it. When they take that couple of hours out of their time to do a debate I think it should be on what’s going on in the economy.
-K. Weston

K Singh said...

I also agreed with Matt F. when he said that if Mccain says to postpone the debate might amke it seem like that he cares about the economy, and it maight put Obama in a difficult sitaution. If Obama says no i don't think we should stop the debate, then McCain can easily say that Brack Obama does not care about the economy. I also, agrred with Rajvir when she said that McCain should have done somthing before instead of waiting till the last mintue and trying to show he cares about the economy.

Sanaa Elissa Awan said...

I don't believe that McCain should cancel the debate. As President, you need to get your priorities straight and do the most important things first, but you also have to address more than one issue at a time. You can't stop other situations to deal with one of them.

McCain's effort to make America believe that he cares about the economic is apparently working on a few people already.

I agreed with Rajvir when she said, "As Senator, he [McCain] could have done something sooner." Yes, Obama was a senator too and he also could have done something but the Republican Party is currently in office and in a higher position to take an action.

It is nice that they are willing to work together but they can't push everything else to the side when America is on the verge of going into another Great Depression.

Matthew Barnett said...

About McCain canceling the debate, it get me mad. The whole country and many people who haven't made up their minds yet on who they want to vote for was waiting for this debate. This debate was planned for about more than a month and now McCain wants to cancel it. I feel that unfare and unrighteous for him to be stopping the debate to talke about the economy. He shud have been talking to Bush about the economy many years back when they saw the country was going into debt. I agree with McCain that they should talk about the economy, but they should do it after the debate because them talking isn't going to make an drastic difference. To me the debate is more important so the country can see what both candidates plan to do about the problems. The country will not be properly informed about our two candidates if they don't debate. Making speeches is nothing to some people, people want to seee how the candidates plan to fix the country and how they operate under presser.

M. Frank said...

With the economy on the verge of collapse and shambles, I find it coincidential that now the Republicans are working quickly to try and sweep up the mess that the Bush administration may have started. Just weeks ago, it was John McCain and President Bush reassuring the country that there was nothing wrong with the economy and it would work out okay. We see now that this is clearly not the case.
I do not see how a sensible human being can vote Republican, when they have shown such a blatant disregard for the economy of our country for almost eight years. Imagine if they took this kind of approach to all political issues: if Republicans only reacted to terrorism when one of our nuclear reactors were attacked. Shrugging off issues is not the way to go.
It is also completely unsensible to fix an issue of debt by pouring excess amounts of funds into bankrupt companies and businesses that have since failed.

Anonymous said...

Government Class
9-25-08

"Were paying companies back that are failing"..Alex
"What if we borrow money from china?" ...Omar.

Matthew F, John Ray, and Sana all said that McCain cares about the economy and its crisis..that's why he is going to put off his campaign. Well, I agree because everyone should be focused on this and help anyway possible. Obama will probably do the same. And during class Omar said "what if we borrow money from china?" If we do that we won't be able to pay them back...at least as far as things are now in our economy.This will provoke china to start turning on us. That also goes for foreign other countries. Alex also brought up a true point. "We are paying back the companies" This is kinda scary that the president asks US the people to help him..meanwhile he was supposed to have had a plan for such crisises like Wall Street. I honestly think all of this is an inside job!

U. Cheema said...

In response to what Omar asked "What if we borrow money from china?"

We already have borrowed too much money from China and we still are for financing the war and to buy oil from Saudia Arabia. The summer has ended and our debt to China has increased. Majority of our debt is owned by China and Japan. We don't even have enough money to fund the war we started and to fix the current economic crisis.

A.Potter said...

Ifi was to talk to the congress, I would tell them "enough is enough". I don't think its fair that America should pay for the banks mistakes.

-A.Potter

Omar Francis said...

I agree with johnray when he said that mccain is not ready for the debate because I saw the debate and he was looking nervous.Also I think they shuold of a never think about canceling the debate because the president should handle his own priorities and let the canidates battle it out.Bush doesnt need any help

Alex D. said...

I would have to agree with john ray comment. Our president Bush
is a republican and he hasn't did much for our country, Mr. McCain is very similar he promises that if him and his republican party has a chance they would make a huge change but we gave the republican party so many chances and this is the result that we have gained .I believe that the debate won't change my bills that i have to pay so i really could careless
thank you

A. deonarine

JRay Vicencio said...

After everything i heard i feel as if both are suited to run the country. Obama and Mccain are both candidates that were picked for a reason. They wouldnt be picked to run their party if they were not qualified, so to what everyone is saying, McCain may not be the speaker, but he can be the man behind the desk.

Gitu K. said...

I dont think they should cancel the debate for an economy crisis. It always be there to deal with. But the presidential election is coming. I agree with apeksha; If McCain says hes ready then he is ready.

C.Jones said...

The economany is a very important issue to attend to but it is not the only problem that this country has. Obama was right to not cancel the debate because people need to no how would you help them during this time of crisis. If you can change or fix the economany than thats good but once again everyone has more than one people to attend to.

C.Jones said...

Bush only meet with the candidates because he had to. He knew it was his job to deal with this problem that is destroying this country. I did think that it was very smart of him to bring both Obama and McCain together to help deal with this problem.

A Rao. said...

Going to the debate or canceling it will have the same effect. If they go to meet with Bush, they would only discuss ideas. If they go to the debate, McCain and Obama will have a go at convincing the US that they have a stellar idea of fixing the economy, while saying the other guy's idea will only make things worse.