WASHINGTON – After fits and starts, the White House and Congress are moving on parallel tracks toward a new round of heavy intervention in the U.S. economy to try to brake a downturn that President Barack Obama says has now grown into "a full-blown crisis."
The Treasury Department planned to announce Tuesday a revamped bank rescue plan, one calling for a stepped-up role by private investors. And an $838 billion stimulus bill was headed for expected Senate approval after clearing a critical procedural hurdle Monday.
"It's the right thing to do even though I know it's expensive," Obama said of the legislation, which has little Republican support in either chamber of Congress. At his first White House prime-time news conference, he sought to build public support for quick passage of the legislation.
The Treasury Department, meantime, was ready to announce how it will spend the remaining $350 billion of the $700 billion financial rescue program started by the Bush administration last fall. The plan envisions big investors buying more than $1 trillion in troubled assets from the banks, according to congressional staffers briefed on the plan Monday night by Treasury officials.
Obama depicted his administration's rewrite of the bank bailout effort as a template for "restoring market confidence."
"The credit crisis is real, and it's not over," Obama said.
On a day of high economic activity, Obama was headed Tuesday to Fort Myers, Fla., a metropolitan area among the hardest-hit by mortgage foreclosures, for another town-hall meeting like the one he held Monday in Elkhart, Ind.
There, he warned the crisis was so deep it might become irreversible without strong government actions. At his East Room news conference Monday night, Obama expanded on that dire warning.
"This is not your ordinary, run-of-the-mill recession," he said. He cited Japan's failure to take bold actions in time to reverse a recession that turned the 1990s into a "lost decade" with no economic growth.
He said failure to act quickly "could turn a crisis into a catastrophe."
"And if there's anyone out there who still doesn't believe this constitutes a full-blown crisis, I suggest speaking to one of the millions of Americans whose lives have been turned upside-down because they don't know where their next paycheck is coming from," Obama said.
He placed the blame for this squarely on former President George W. Bush.
"But as we've learned very clearly and conclusively over the last eight years," Obama said, "tax cuts alone can't solve all of our economic problems, especially tax cuts that are targeted to the wealthiest few Americans. We have tried that strategy time and time again, and it's only helped lead us to the crisis we face right now."
Democratic Senate leaders were able Monday to rally the votes needed to clear a procedural barrier to open the way toward expected final passage Tuesday. The 61-36 vote, just one more than the 60 required, was heavily partisan, with only three Republicans — Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania — joining all Democrats in voting for the package, a blend of federal spending and tax cuts.
Senate Majority Leader Harry Reid of Nevada called it "the first step on the long road to recovery." In the House, not a single Republican had voted for that chamber's version of the legislation.
Still ahead was a difficult round of further negotiations aimed at producing a final House-Senate compromise. Congressional leaders hope to get the bill to Obama's desk before the Presidents Day recess next week.
"I'm reticent to get into the negotiating," White House press secretary Robert Gibbs told NBC's "Today" show Tuesday. "I will tell you this, the president is willing to do whatever it take with Democrats or Republicans to get something on his desk." He said the American people need the help "right now."
The new bank rescue plan will propose a government partnership with the private sector to buy troubled debt now clogging the balance sheets of banks.
The administration is counting on private investors to help rescue banks by buying up some of these bad loans and other toxic debt. Hedge fund managers and other big investors are counting on the government to sweeten the deal before they open their checkbooks.
The plan also includes fresh cash injections into banks, new programs to help struggling homeowners and an expansion of a Federal Reserve program to spur consumer lending.
Obama criticized the way the first $350 billion was spent by the Bush administration: "We didn't get as big of a bang for the buck as we should have."
But he brushed aside a question on whether his administration would seek more funds for the Troubled Asset Relief Program. "We don't know yet if we'll need additional money, or how much additional money we'll need," Obama said.
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