At the Chamber: President Bush on the Economy
President Bush crossed Lafayette Park this morning to give an update to the American people on the state of the economy and the Administration’s continuing efforts to stabilize and strengthen our markets.
The President spoke in the U.S. Chamber’s Hall of Flags, so named for the banners of great explorers which fill the room - explorers who opened channels of trade between the Old World and the New, making the world a little bit smaller. It seems an appropriate venue as we are in the middle of a great economic exploration, in a world which has grown very small indeed. The current financial crisis has caused tremors from Main Street to Wall Street, the City of London to the Forbidden City. We are all in this together.
The U.S. Chamber’s executive vice president of Government Affairs Bruce Josten introduced the President, noting that since this crisis began, the Bush administration has acted quickly, decisively, and in a bipartisan manner to prevent a systemic collapse of our financial system. President Bush, Secretary Paulson, Chairman Bernanke, and senior Congressional leaders from both parties put their differences aside to act in the national interest. Josten also pointed out that this is not the first time this administration has faced an economic crisis; their smart policies of tax cuts and targeted investment following 9/11 and the bursting of the .com bubble led us out of a recession in 2001.
President Bush then took the podium. Speaking with resolve he outlined how we got here, and where we need to go. Our nation is in the middle of a serious financial crisis and "The federal government has responded to this crisis with systematic and aggressive measures to protect the financial security of the American people. People look at this crisis and say, oh, it's only Wall Street. I don't think so."
The President urged patience, saying "It took a while for the credit system to freeze up. It's going to take a while for the credit system to thaw." But he believes that decisive measures which are big enough and bold enough are being taken, and the American people can be confident that they will work. He noted the unease of some of our citizens on the scope of the government’s involvement, but we need "an extraordinary response to an extraordinary crisis." Current actions have already prevented a "disorderly failure of these large, interconnected firms", meaning Bear Sterns, AIG, Fannie and Freddie.
President Bush took care to point out that the programs are "designed with strong protections to ensure the government's involvement in individual banks is limited in size, limited in scope, and limited in duration." The Federal Government will use their voting shares to protect the taxpayer’s investment, not to direct the operations of the banks. And once the crisis has ended, it will relinquish ownership.
And while government may not profit from the enterprise, the cost is not as high as it seems. Increases in the value of purchased assets and dividends paid on equity will offset much of the initial outlay. After 5 years the dividend return raises, to give banks a strong incentive to seek private funding, and re-purchase their shares quickly.
Lastly, the President urged his successor to act on the Paulson Blueprint for building a modern regulatory system: We must not use the current crisis as an excuse to pile on more static, ineffective regulation; We must not use this as an excuse to raise taxes or isolate ourselves economically; We must pass the Colombia, Panama and South Korea trade agreements, and "We must not blur the line between government and the private sector -- and we must not supplant the profit motive with political motives."
Every president since Dwight D. Eisenhower has spoken to members of the U.S. Chamber of Commerce during their tenure in office. We have hosted President Bush many times through the years, and are always honored to do so. But it was especially meaningful today, in the midst of this serious financial crisis, to have the President at the Chamber, providing a clear vision, and a systematic, bipartisan plan for recovery. And a clear reminder of spirit required to advance human progress:
"We must also never lose sight of the enormous benefits delivered by the free enterprise system. Despite corrections in the marketplace and instances of abuse, democratic capitalism remains the greatest system ever devised. It allows individuals to rise as high in their societies as their talents and ambition will take them. It rewards hard work, intelligent risk-taking, and the entrepreneurial spirit. Around the world, free market policies have lifted millions of people out of poverty, and given them the opportunity to build a more hopeful life."