WASHINGTON (CNN) -- President-elect Barack Obama could reverse some of President Bush's most controversial executive orders, including restrictions on embryonic stem cell research, shortly after taking office in January.

President-elect Barack Obama may overturn many of the executive orders that President Bush implemented.

President-elect Barack Obama may overturn many of the executive orders that President Bush implemented.

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Two other executive orders from Bush -- one dealing with a so-called "gag" order on international aid organizations regarding abortion, the other with oil and gas drilling on federal lands -- also are receiving increased scrutiny.

Obama's transition team is reviewing hundreds of Bush's executive orders, according to John Podesta, Obama's transition co-chair.

New presidents often use executive orders to put their stamp on Washington quickly. Unlike laws, which require months to complete and the consent of Congress, presidents can use their executive authority to order federal agencies to implement current policies.

"Much of what a president does, he really has to do with the Congress -- for example, budgeting, legislation on policy -- but executive actions are ones where the president can act alone," said Martha Kumar of the White House Transition Project, a nonpartisan group established to help new presidential administrations. See what orders Lincoln, Franklin D. Roosevelt, other presidents issued »

Obama is expected to use his executive authority to reverse Bush's order limiting the types of embryonic stem cell research that can receive federal tax dollars.


Advocates for those suffering from a host of diseases -- including diabetes, Parkinson's disease and spinal cord injuries -- are eagerly awaiting the Bush-era restrictions to be lifted.

"We have every reason to believe -- if not on Day One, then in the very near future -- they will be issuing an order rescinding this policy," said Amy Comstock Rick, president of the Coalition for the Advancement of Medical Research. Video Watch how Obama could reverse Bush »

In August 2001, Bush barred the National Institutes of Health from funding research on embryonic stem cells other than that using 60 cell lines existing when he signed the executive order.

Researchers say the ban has limited their progress and want the opportunity to create new stem cells from human embryos. Many conservatives, however, object to the destruction of human embryos because they believe it ends a human life.

On his campaign Web site, Obama said he supports the creation of new stem cells from embryos created for in vitro fertilization treatments that would otherwise be discarded.

But White House spokeswoman Dana Perino on Monday suggested that the incoming Obama administration should consider keeping Bush's policy in place.

"Unfortunately, the president's position on stem cells has been misconstrued over the years, with the suggestion that President Bush put a ban on research for embryonic stem cell research. That is not true," Perino said. "The president made a very important choice after a lot of careful deliberation." Video Watch Obama's ambitious agenda »

Other controversial Bush measures Obama is expected to overturn are related to abortion and family planning.

U.S. State Department officials and family planning groups such as Planned Parenthood said they expect Obama to overturn the "Mexico City" policy, first instituted by the Reagan administration. The policy prevents taxpayer dollars from funding groups that perform or promote abortions overseas.

President Clinton dropped the order, but Bush re-implemented it and expanded the policy to ensure State Department funding does not go to family planning organizations that even counsel about abortion.

An Obama administration also could overturn the Bush administration policy of banning funding to organizations such as the U.N. Population Fund that operate in countries that practice forced sterilization, including China, which adheres to the "one child" policy.

Podesta said his team also is reviewing Bush's order that lifted restrictions on oil drilling on fragile federal lands in Utah. Environmental groups decried Bush's decision when he opened the lands to exploration this month, and Podesta called the decision a "mistake."

One set of executive orders that may take longer to overturn pertains to detainees at the Guantanamo Bay, Cuba, military prison.

Obama has said he wants to close the prison, but Denis McDonough, a senior adviser to the incoming Democrat, said Monday that no decisions have been made about what to do with the prison's 255 inmates.

"There is no process in place to make that decision until his national security and legal teams are assembled," McDonough said.


Reversing Bush's executive orders would be an immediate way for Obama to show that a new era has begun in Washington, said Jonathan Turley, a George Washington University law professor.

"Until President Obama gets rid of all these executive orders, he'll be sharing his presidency with his predecessor," Turley said. "Now that's a particularly obnoxious thought for an administration that was elected for change

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Members of Congress, including Reps. Nancy Pelosi and Steny Hoyer, right, met with auto executives last week in Washington.

Members of Congress, including Reps. Nancy Pelosi and Steny Hoyer, right, met with auto executives last week in Washington. (By Brendan Hoffman -- Getty Images)



President-elect Barack Obama yesterday urged President Bush to support immediate aid for struggling automakers and back a new stimulus package, even as congressional Democrats began drafting legislation to give the Detroit automakers quick access to $25 billion by adding them to the Treasury Department's $700 billion economic rescue program.


Bush, speaking privately to Obama during their first Oval Office meeting, repeated his administration's stand that he might support quick action on those bills if Democratic leaders drop their opposition to a Colombia trade agreement that Bush supports, according to people familiar with the discussions.

The discussions raised the stakes for a lame-duck session of Congress that could begin next week and came as fears about General Motors' financial condition yesterday pushed the company's stock price to its lowest level in about 60 years. Obama said last week that passage of the economic stimulus package and help for American car companies are his top priorities. The Bush administration has steadfastly pushed for trade deals before he leaves office.

Congress could consider the auto measure as soon as next week, when lawmakers are scheduled to return to Washington. Yesterday, in an urgent bipartisan appeal, all 15 House members and both senators from Michigan sent a letter asking the Bush administration to include the auto industry in the Treasury program on its own initiative or to work with Congress to modify the program.


"There's an urgent crisis. It's a national issue. If the administration won't act, we'll have to. But they should act," said Rep. Sander M. Levin (D-Mich.).

The entire auto industry is suffering these days, but GM has been particularly hard hit as sales have slowed and credit has tightened. Once the world's largest automaker, the company said yesterday that it was in danger of running out of cash next year. The company is taking a series of steps to conserve cash, including cutting production and laying off 5,500 more factory workers. Yet one closely followed Deutsche Bank analyst cut his forecast on GM's share price to zero, saying that even if GM manages to avert bankruptcy, "we believe that the company's future path is likely to be bankruptcy-like."

The gloomy assessment and others like it helped knock down GM's shares by nearly 23 percent, to $3.36.

So far, administration officials have resisted calls to include the Detroit automakers in the Treasury's bailout program, which was conceived to stabilize banks and other financial institutions reeling from the global credit crisis. Opening the program to the auto industry would expand the government's role in private enterprise far beyond the banking sector, and analysts warn that it could prompt a long line of companies from other industries to show up in Washington with their hands out.

Administration officials have pointed instead to $25 billion in low-interest loans recently approved by Congress as a source of quick help for the car companies. Yesterday, White House press secretary Dana Perino told reporters that the White House would be open to legislation that removes bureaucratic roadblocks slowing the release of that money.

"Congress is going to come back into town next week," Perino said. "If it wants to do anything in addition for the automakers, we'll certainly listen to ideas they have on how to accelerate the loans to viable companies."

Democrats said the loan program is intended to provide long-term assistance to the car companies to retool their factories to produce more fuel-efficient vehicles. They said it was not designed to provide urgent relief from a crisis in consumer confidence that has pushed auto sales to their lowest level in two decades.

"GM has estimated maybe they'd get a billion or two at most next year" from the previously approved loan program, Levin said. "It wouldn't provide for the infusion of capital that's absolutely necessary for them to bridge to the future."

Democrats want the Bush administration to approve an additional $25 billion in loans from the Treasury program, bringing total federal assistance to the car companies to $50 billion. In a letter sent yesterday to Treasury Secretary Henry M. Paulson Jr., Levin and other Michigan lawmakers urged Paulson "in the strongest possible terms to use your authority under the Emergency Economic Stabilization Act (EESA) or other statutes to immediately address a significant and systemic threat to the U.S. economy and provide emergency assistance to the domestic automobile industry."

Given that one of every 10 U.S. jobs depends in some way on the auto industry, the letter says, helping Detroit is "well within the broad mandate of the Treasury Department to promote stable economic growth. Given the urgency of the situation, we ask that you work with us in the coming days to provide immediate loan support to the domestic auto industry, including, if necessary," by amending the emergency stabilization act.

The letter followed a similar entreaty to Paulson over the weekend by House Speaker Nancy Pelosi (D-Calif.) and House Majority Leader Harry M. Reid (D-Nev.).

Amending the Treasury program would require action by both chambers of Congress. As of yesterday, Senate leaders planned to convene Nov. 17, but House leaders had yet to decide whether to summon lawmakers back to work. Although most House members will be in Washington next week to choose the leadership for the next Congress, retiring members and those who lost their seats on election night will not return unless Pelosi calls them back.

House leaders have said they are unlikely to convene the House for legislative business unless the Bush administration agrees to negotiate a spending package to revive the broader economy. As of yesterday, although the two sides continued to talk, there was no deal. But if the Senate approves a $61 billion economic stimulus package that the House passed in September, the House might return to work on that legislation, creating an opportunity to help the automakers.

Michigan lawmakers from both parties said failure to act would be devastating, not only to the car companies but also to the nation.

"Our nation's leaders must not turn a deaf ear toward helping the nation's automakers," Rep. Fred Upton (R-Mich.), co-chairman of the Congressional Auto Caucus, said in a written statement. "We can either stand by and do nothing, watching tens of thousands of jobs in Michigan and Middle America evaporate, or we can meet our challenges head on."

Given the vast sums of money the Bush administration has provided to Wall Street, including a rapidly growing bailout for insurance giant American International Group, Levin said the administration had no excuse not to act.

"How much are we giving AIG? $150 billion? And we're talking about $25 billion for what has been the major industry of this country," Levin said. "If there's a will, there's a way. So now it's up to the administration to respond. If they don't, we'll act."










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Obama visits White House

Politics 2008. 11. 11. 08:18

Bush calls meeting with Obama 'friendly'


President Bush had a "relaxed" and "friendly" meeting with President-elect Barack Obama after he and first lady Laura Bush welcomed their successors to their future home Monday, a White House spokesman said.

President Bush and Laura Bush welcome Barack and Michelle Obama to the White House on Monday.

President Bush and Laura Bush welcome Barack and Michelle Obama to the White House on Monday.

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"The president and the president-elect had a long meeting, described by the president as good, constructive, relaxed and friendly," White House press secretary Dana Perino said in a statement. "The president enjoyed his visit with the president-elect, and he again pledged a smooth transition to the next administration."

Perino said the two discussed both national and international issues but did not provide specifics of the conversation. Bush also gave Obama a tour of the White House's living quarters, including the Lincoln bedroom.

Bush and Obama held a private meeting in the Oval Office, while the first lady gave incoming first lady Michelle Obama a tour of the residence.

The president and president-elect walked together along the Colonnade by the Rose Garden before entering the Oval Office together. They briefly waved to reporters along the way.

Obama and Bush were not expected to speak on camera after their meeting.

An aide to Obama said they were "going to let the pictures speak for themselves."

The two met in the Oval Office for just over an hour. When President George H.W. Bush hosted President-elect Bill Clinton after the 1992 election, the two talked for nearly two hours.

Monday's meeting was a historic formality, but it was also a time for serious talks. It marked the first time that Obama has visited the Oval Office. Video Watch Bush welcome Obama to the White House »

The two were expected to discuss "a broad range of issues," focusing on the economy, according to a leader of Obama's transition team.

"It's clear that we need to stabilize the economy, to deal with the financial meltdown that's now spreading across the rest of the economy. The auto industry is really, really back on its heels," transition team leader John Podesta said.

Podesta told CNN's "Late Edition" that Obama will push Congress to enact "at least part" of an economic package before he takes office in January, but said the problems Americans face need short- and long-term approaches.

The president and president-elect also were expected to talk about national security and the war in Iraq.

Perino said earlier Monday that Bush and Obama were going to have a "private meeting" in which they would discuss "a range of issues." Go inside the Oval Office

"I don't think any of us can understand what it's like for two people ... who understand what it's like to be the commander in chief, to be the leader of our great country," she said. "And so they'll have a private conversation. I'm sure they'll talk about a range of issues."

Despite the negative tone of the campaign season -- in which Obama frequently campaigned against what he called Bush's "failed policies" -- Bush has pledged to do everything he can to make sure they have a smooth transition. iReport.com: What's your message for Obama?

"When I called President-elect Obama to congratulate him on his historic victory, I told him that he can count on my complete cooperation as he makes his transition to the White House. Ensuring that this transition is seamless is a top priority for the rest of my time in office," Bush said in his radio address this weekend.

Podesta said cooperation with Bush administration officials has been "excellent" since Tuesday's election. Video Watch more on the transition to power »

Obama said he was "gratified by the invitation" to meet with the president and his wife.

"I'm sure that, in addition to taking a tour of the White House, there's going to be a substantive conversation between myself and the president," he said at a news conference Friday.

"I'm going to go in there with a spirit of bipartisanship and a sense that both the president and various leaders in Congress all recognize the severity of the situation right now and want to get stuff done," he said.

Given their drastically different views on foreign policy, Mark Preston, CNN's deputy political editor, predicted an "uncomfortable meeting at best." Video Watch CNN's Mark Preston talk about the meeting »

"Let's not forget that Barack Obama ran against President Bush every day when he was taking on John McCain. While they will be cordial, I bet you it will be uncomfortable," Preston said.

As the president and president-elect met in the Oval Office, Perino gave Robert Gibbs a tour of the White House press office.

Gibbs was the communications director for Obama's presidential campaign. He has not officially been named the incoming press secretary, but he is widely considered the top contender for the position




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Obama to take office amid deep public pessimism
President Bush and President-elect Obama in the Oval Office today. (White House photo)

Obama to take office amid deep public pessimism
 


WASHINGTON (CNN) -- On the day that President-elect Barack Obama visited the White House, a new national poll illustrates the daunting challenges he faces when it becomes his home next year.

President-elect Barack Obama walks along the White House Colonnade with President Bush on Monday.

President-elect Barack Obama walks along the White House Colonnade with President Bush on Monday.

Only 16 percent of those questioned in a new CNN/Opinion Research Corporation survey released Monday say things are going well in the country today. That's an all-time low. Eighty-three percent say things are going badly, which is an all-time high.

"The challenge Obama faces has never been greater. No president has ever come to office during a time when the public's mood has been this low. In the 34 years that this question has been asked, the number who say things are going well has never fallen below 20 percent," said Keating Holland, CNN's polling director.

The 83 percent saying things are going badly is "more than in 1992, when the first President Bush was ousted because of the economy, stupid. That's more than in 1980, when President Carter got fired after the malaise crisis. That's more than in 1975, after Watergate and the Nixon pardon," said Bill Schneider, CNN senior political analyst.

So far, Obama seems to be meeting the public's high expectations. Two-thirds of all Americans have a positive view of what he has done since he was elected president, and three-quarters think he will do a good job as president. Video Watch Obama's ambitious agenda »

"Obama has the support of virtually every African-American in the poll, but he also gets high marks from a solid majority of whites," Holland said.

But that optimism doesn't hide what appears to be concern about the economy. Six in 10 say that they don't have a clear idea of what Obama would do to improve the economy. Video Watch Bush welcome Obama at the White House »

The all-time low on the public's mood may have something to do with the poll's finding that President Bush is the most unpopular president since approval ratings were first sought more than six decades ago. Seventy-six percent of those questioned in the poll disapprove of how he is handling his job.

That's an all-time high in CNN polling and in Gallup polling dating back to World War II.

"No other president's disapproval rating has gone higher than 70 percent. Bush has managed to do that three times so far this year," Holland said. "That means that Bush is now more unpopular than Richard Nixon was when he resigned from office during Watergate with a 66 percent disapproval rating."

Before Bush, the record holder for presidential disapproval was Harry Truman, with a 67 percent disapproval rating in January of 1952, his last full year in office.

As Obama visits the White House to start the transition from the Bush administration to an Obama administration, 57 percent of those questioned think the transfer of power will be relatively easy and free from tension, with 39 percent saying the transition will be difficult. Video Watch what Bush and Obama may talk about »

"A majority say that the transition from Bush to Obama will go smoothly, although nearly one in four predict a lot of tension between Bush aides and Obama aides in the next few weeks. That sentiment is highest among Democrats, but even among them, a majority believes that the transition will be relatively easy," Holland said.

The CNN/Opinion Research Corporation poll was conducted Thursday through Sunday with 1,246 adult Americans questioned by telephone. The survey's sampling error is plus or minus 3 percentage points.



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WASHINGTON -

Democratic leaders in Congress asked the Bush administration on Saturday to provide more aid to the struggling auto industry, which is bleeding cash and jobs as sales have dropped to their lowest level in a quarter-century.

House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout to include car companies.

"A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector's work force," they wrote. "The economic downturn and the crisis in our financial markets further imperiled our domestic automobile industry and its work force."

There was no immediate comment from the Bush administration about the request to broaden the $700 billion financial industry bailout so automakers could get a share.

Automakers already want an additional $50 billion in loans from Congress to help them survive tough economic conditions and pay for health care obligations for retirees. The companies are seeking the loans as part of an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress this month.

Top executives of General Motors (nyse: GM - news - people ), Ford, Chrysler LLC and the president of the United Auto Workers met with congressional leaders Thursday to discuss the loans. The money would be on top of the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

"We left the meetings convinced that our nation's automobile industry - the heart of our manufacturing sector - and the jobs of tens of thousands of American workers are at risk," Pelosi, D-Calif., and Reid, D-Nev., said in their letter to Paulson.

Automakers want the new loans included in an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress this month. If Congress approved more loans, it would come with strings attached. Potential protections include limits on executive compensation, awarding the government preferred stock in the companies and a suspension of dividend payments to investors.

GM, the nation's largest automaker, warned Friday that it may run out of money by the end of the year after piling up billions in third-quarter losses and burning through cash at an alarming rate. GM's chairman and chief executive, Rick Wagoner, said the company will take every action possible to avoid bankruptcy. GM has planned more job cuts, including another 5,500 salaried and factory workers, but company officials warn that those measures alone would not be enough and that federal aid was essential.

Ford, which recently announced it would slash more than 2,000 white collar jobs, also has seen a rapid decline in its cash supply. But it is in better shape because the company borrowed billions of dollars in 2007 by mortgaging its factories. The company said it had enough cash to make it through 2009.

"We must safeguard the interests of American taxpayers, protect the hundreds of thousands of automobile workers and retirees, stop the erosion of our manufacturing base, and bolster our economy," the Democratic leaders in Congress wrote.

President-elect Obama said Friday his transition team would explore policy options to help the auto industry. Obama's economic transition team includes two allies of the U.S. auto industry - Michigan Gov. Jennifer Granholm and former Rep. David Bonior, D-Mich.

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DIXVILLE NOTCH, New Hampshire (CNN) -- Democratic presidential candidate Barack Obama emerged victorious in the first election returns of the 2008 presidential race, winning 15 of 21 votes cast in Dixville Notch, New Hampshire.

Dixville Notch residents wait for the stoke of midnight to be the first voters for the nation's presidential election.

Dixville Notch residents wait for the stoke of midnight to be the first voters for the nation's presidential election.

People in the isolated village in New Hampshire's northeast corner voted just after midnight Tuesday.

It was the first time since 1968 that the village leaned Democratic in an election.

Obama's rival, Republican John McCain, won 6 votes.

A full 100 percent of registered voters in the village cast ballots. And the votes didn't take long to tally.

The town, home to around 75 residents, has opened its polls shortly after midnight each election day since 1960, drawing national media attention for being the first place in the country to make its presidential preferences known.

However, since 1996, another small New Hampshire town -- Hart's Location -- reinstated its practice from the 1940s and also began opening its polls at midnight.

The result in Dixville Notch is hardly a reliable bellwether for the eventual winner of the White House -- or even the result statewide.

While New Hampshire is a perennial swing state -- with 4 Electoral College votes at stake -- Dixville Notch consistently leans Republican. The last Democrat it picked was Hubert Humphrey over Richard Nixon in 1968.


President Bush won the town in a landslide in the last two elections: He captured 73 percent of the vote in 2004 (19 residents picked Bush while six preferred Sen. John Kerry), and secured 80 percent of the vote in 2000 (21 votes for Bush, five votes for Al Gore.)

But villagers expected the results to be close this year given Democrats now outnumber Republicans there.

The town picked both John McCain and Barack Obama for the New Hampshire Democratic and Republican primaries in January. McCain ultimately won the state of New Hampshire, while Sen. Hillary Clinton upset Obama there.
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Treasury Secretary Henry Paulson, left, listens as President Bush speaks with the G7 Finance Ministers in the Rose Garden of the White House, Saturday, Oct. 11, 2008, in Washington. (AP Photo/Evan Vucci) 



Treasury Secretary Henry Paulson, left, listens as President Bush speaks with the G7 Finance Ministers in the Rose Garden of the White House, Saturday, Oct. 11, 2008, in Washington. (AP Photo/Evan Vucci) (Evan Vucci - AP)


President Bush this morning called on world governments to continue working together in a bid to stabilize collapsing financial markets.

"All of us recognize that this is a serious global crisis, and therefore deserves a serious global response," Bush said at the White House after meeting with finance ministers from the world's seven biggest industrialized countries who are in Washington to hammer out a joint set of principles aimed at containing the financial crisis and restoring badly damaged confidence.

Bush also warned countries not to work against each other, saying that a "common purpose" is necessary to solve the worsening crisis. He praised the Group of Seven for a communique issued late Friday that promised concerted action.

"We're in this together; we will come through this together," Bush said.

The president has made almost daily attempts over the past three weeks -- including an appearance in the Rose Garden yesterday -- to calm markets or reassure Americans about the economy. But anxiety is still high. Yesterday, the Dow Jones industrial average fell 128 points, or 1.49 percent, to 8451, but during the day it had lurched from 7883 to 8901 -- a roller-coaster ride of more than 1,000 points and an indicator of the uncertainty gripping investors as they try to figure out the severity of the economic downturn and whether various companies will survive.

Over the past five days, the Dow Jones industrial average has registered the biggest weekly percentage decline in its 112-year history, surpassing the record decline set during the Depression, in the week ending July 22, 1933.Overseas markets have also been hit hard.

Bush listed a series of steps taken by the United States and other major economies, such as his administration's $700 billion rescue plan and a coordinated move this week to cut interest rates.
The benefits will not be realized overnight," Bush said. "But as these actions take effect, they will help restore stability to our markets and confidence to our financial institutions."

TheG-7 finance ministers' communique last night vows to "take all necessary steps to unfreeze credit and money markets" and to "use all available tools" to prop up and prevent the failure of institutions critical to the financial system.

U.S. Treasury Secretary Henry M. Paulson Jr. also yesterday confirmed earlier reports that the United States is drawing up plans to buy equity stakes in financial firms. He said federal money would be offered on a "standardized" basis to all banks in a way that would attract new private capital, as well.

The finance ministers' communique was designed to assure investors that world leaders would work in concert rather than at cross-purposes in forging measures to aid besieged financial institutions. It laid out common guidelines that endorsed the injection of capital into the banking system, the purchase of troubled assets from banks and broader guarantees of deposits. Europeans were also pressing for guarantees of interbank lending, though the Bush administration was reluctant to embrace the measure.

"The moral hazards have to be dealt with at a later stage. That's my sense," Christine Lagarde, France's minister of economy, industry and employment, said before the meeting of the Group of Seven, setting aside concerns about governments assuming private-sector risks. Lagarde added that the "functioning of the basic principles of our markets" has to be restored. "That is the main and first and top priority," she said.




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President Bush said Tuesday that the economic damage to the nation will be 'painful and lasting' if Congress fails to pass a $700 billion bailout bill.

President Bush took to the podium again this morning in an attempt to salvage his endangered financial rescue package, warning lawmakers that the United States will face a "painful and lasting" economic downturn if they do not approve a bailout.

Appearing drawn and frustrated, Bush said in remarks at the White House that this is a "critical moment" for the U.S. economy. He noted that yesterday's single-day loss on the stock market, estimated at more than $1 trillion, was greater than the highest estimated cost of his administration's bailout plan.

"The consequences will grow worse each day if you do not act," Bush said, addressing dissident lawmakers. He added a moment later: "Our economy is depending on decisive action from the government...This is what elected leaders owe the American people."

"Our country is not facing a choice between action and the smooth functioning of the free market. We are facing a choice between action and the real prospect of financial hardship" that will be felt across the board, Bush said.

"I am disappointed by the outcome" of the House vote, Bush said, "but I assure our citizens and citizens around the world that this is not the end of the legislative process."

That the problem has become global could be see in falling stock values in Asia, bank rescues in Europe, and a spike in short-term interest rates that reflects the increasing unwillingness of financial institutions to lend money to each other -- depriving the world economy of an important tool for providing business and households with the cash needed to make major purchases and pay bills.

Bush's plea marks the seventh straight day that he has issued a public plea for passage of a rescue plan, starting with an unusually dire prime-time speech last Wednesday in which he warned of a looming "financial panic." It came a day after a majority of House lawmakers, including two-thirds of his fellow Republicans, rejected the administration's proposed $700 billion bailout plan. The vote was a devastating blow for Bush, and underscored his rapidly vanishing influence even on members of his own party.


Even as recriminations flew, there was focus on ways to revive the bill and broaden its support. Both presidential contenders, for example, suggested raising federal insurance on bank deposits from $100,000 to $250,000.

The rebellion sent global stock prices plunging, prompting fierce recriminations on the presidential campaign trail. House Democratic and Republican leaders vowed to go back into negotiations to devise compromise legislation to stabilize the credit markets, but no talks were scheduled. After U.S. financial markets closed, with the Dow Jones industrial average down a one-day record of 778 points, or 7 percent, Treasury Secretary Henry M. Paulson Jr. tried to calm frazzled traders, assuring them that work on a market intervention would resume.

"I will continue to work with congressional leaders to find a way forward to pass a comprehensive plan to stabilize our financial system and protect the American people by limiting the prospects of further deterioration in our economy," he said. "We've got much work to do, and this is much too important to simply let fail."

Rarely has a congressional vote held such high drama and produced such immediate repercussions, directly from the House floor to the trading floor. Wall Street traders huddling around television screens watched lawmakers denounce the bailout legislation, and then sent the Dow plummeting. Stocks had recovered somewhat by the time the vote was gaveled to a close, but jittery investors sent them plunging again as Republicans and Democrats took turns blaming each other for the defeat. In a few hours, $1.2 trillion in paper wealth was wiped out.

As lawmakers in Congress pointed fingers, the collapse of the world's financial markets only built steam. Brazil's main stock index lost more than 9 percent on the news of the U.S. congressional vote, and fears spread that other emerging markets could feel the credit crunch. European bourses fell earlier in the day as a result of the financial struggles of major European banks, and regulators from Belgium, the Netherlands and Luxembourg moved to rescue the European banking and insurance giant Fortis. And Citigroup stepped in to buy Wachovia's banking operations for $2.16 billion, making it the dominant bank in the Washington area.


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Economic policymakers work to stabilize global financial markets and say Congress must act quickly on a proposed bailout plan to avoid dire consequences for the U.S. economy.
» LAUNCH PHOTO GALLERY

The House began a heated debate this morning on legislation that would authorize what is likely to become the biggest federal government bailout in the nation's history, shortly after President Bush urged lawmakers to act quickly to approve the $700 billion proposal hammered out over the weekend.

Bush acknowledged that the vote will be "difficult" in the face of opposition from taxpayers and voters but necessary to protect the economy.

"A vote for this bill is a vote to prevent economic damage to you and your community" by stabilizing financial markets and renewing the flow of credit, Bush said, attempting to undercut arguments that the proposed legislation bolsters Wall Street at taxpayers' expense. "This is a bold bill that will keep the crisis in our financial system from spreading through our economy."

"Today's the decision day. I wish it weren't the case," said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee and co-author of the legislation that was crafted in marathon negotiating sessions with Treasury Secretary Henry M. Paulson Jr.

Frank said no lawmaker wants to approve such a large bailout that was made necessary by the mistakes of Wall Street financiers and the mortgage industry, but inaction risked a more widespread financial meltdown. If nothing is done, he said, "the consequences will be much more severe."

With three hours of debate beginning just before 9:30 a.m., lawmakers expect a vote to be wrapped up before 1 p.m. Eastern time. Leaders of both parties are supporting the measure, but neither side has given a public estimate of how much support they have.



During early morning votes on noncontroversial matters, House Speaker Nancy Pelosi (D-Calif.) hurried around the chamber floor, button-holing rank-and-file members and showing them papers, asking for their support.

After a week of political tumult and deepening economic anxiety, congressional leaders yesterday rallied support for the historic proposal, which would grant the government vast new powers over Wall Street and offer fresh help to homeowners at risk of foreclosure.

The proposed legislation would authorize Treasury Secretary Henry M. Paulson Jr. to initiate what is likely to become the biggest government bailout in U.S. history, allowing him to spend up to $700 billion to relieve faltering banks and other firms of bad assets backed by home mortgages, which are falling into foreclosure at record rates.

The plan would give Paulson broad latitude to purchase any assets from any firms at any price and to assemble a team of individuals and institutions to manage them. In wielding those powers, Paulson and others hope to contain a crisis that already has caused the failure or forced the rescue of a half-dozen major Wall Street firms and unnerved markets around the world.

The measure was forged during a marathon negotiating session between lawmakers from both parties and Paulson -- who at one point appeared to negotiators to be on the verge of collapse. Restive Republican lawmakers originally criticized the package as putting taxpayers at risk and violating free-market principles, but many of them appeared yesterday to be dropping their opposition.

House Minority Leader John A. Boehner (R-Ohio) emerged last night from a meeting of House Republicans to say he is "encouraging every member whose conscience will allow them to support this." Boehner said he and other GOP leaders made the case that negotiators had improved the bill by gaining a key concession on a plan to limit taxpayer exposure.




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President Bush President urged congress to support the administration's proposed economic bailout in an address to the nation Wednesday night.
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  Washington Post Staff Writers
Thursday, September 25, 2008; Page A01

President Bush said yesterday that the credit crisis that has seized world markets could devastate the U.S. economy unless Congress acts quickly to approve a $700 billion bailout plan for the nation's financial system, a message aimed at reluctant lawmakers as much as a deeply skeptical public.

"Our entire economy is in danger," Bush said in an address from the White House, emphasizing that the massive bailout was not targeted at "any individual company or industry. It is aimed at preserving America's overall economy."

Warning that "America could slip into a financial panic," Bush blamed the crisis on "easy credit" in the housing market and "the faulty assumption that home values would continue to rise." As mortgage loans went bad and borrowers defaulted, he said, investors have succumbed to a "widespread loss of confidence" that threatens to shut down consumer lending, decimate the stock market, cause businesses and banks to fail -- and cost millions of Americans their jobs.

"Ultimately, our country could experience a long and painful recession," Bush said. "Fellow citizens, we must not let this happen."

Bush delivered the prime-time speech, his first in over a year, after a clamor on Capitol Hill for him to acknowledge the most serious financial crisis in decades and to personally make the case for the government intervention his administration has proposed.

Five days after unveiling the bailout plan, which seeks to purchase troubled assets from faltering financial institutions, administration officials were still struggling to line up support among lawmakers appalled by its cost, doubtful of its methods and outraged by the speed with which they were being pushed to act. While the usually fractious Senate seemed to be coming together behind a version of the proposal, the administration had big trouble in the House, particularly among mistrustful Republicans who said the White House had failed to make a case for the bailout in terms ordinary people could understand.

"I'm seeking answers to two fundamental questions: Why this? And why now?" Rep. Deborah Pryce (R-Ohio) said before Bush delivered his remarks. "You can't make a move this large without the approval of the American people. And we don't have it, yet."

Despite such skepticism, top members of the House Financial Services and Senate Banking committees are slated to sit down this morning in an effort to draft the final details of a bipartisan bill. Bush also invited congressional leaders as well as presidential candidates John McCain and Barack Obama to meet with him at the White House today.

The president's top economic advisers were lobbying hard yesterday for passage of the bill. In testimony before the House Financial Services Committee, Treasury Secretary Henry M. Paulson Jr. said the White House would drop its resistance to lawmakers' demands for limits on executive compensation at companies that accept taxpayer money. Rep. Barney Frank (D-Mass.), the committee's chairman, called that a "big step forward" and said he would push next year to apply those limits more broadly.

Frank said Democrats in the House and Senate had reached agreement on a bill that would include an oversight board to monitor the bailout program, requirements that taxpayers share in future profits of companies that seek assistance and new powers for bankruptcy judges to modify home mortgages for distressed borrowers. Lawmakers also discussed doling out the money in segments, Frank said, adding, "It's not going to be a straight $700 billion."

Democrats will present that bill this morning to Republican lawmakers in hopes of reaching a final agreement, Frank said. He said the biggest sticking points are likely to be the bankruptcy provision and a proposal by Senate Democrats to dedicate to affordable housing some of the proceeds from the eventual sale of the assets.

Hours before Bush's speech, House Speaker Nancy Pelosi (D-Calif.) and House Minority Leader John A. Boehner (R-Ohio) issued a joint statement saying they were "working in a bipartisan manner" and had "made progress" on a bill. But even as the substance of a deal began to take shape, the politics were in turmoil. McCain declared that he did "not believe that the plan on the table will pass" and announced he was leaving the campaign trail to return to Capitol Hill to lead negotiations, a move panned by Democrats as a political stunt. Meanwhile, with less than six weeks until the November election, Democratic leaders said they would approve the plan only if a majority of Republicans in both chambers endorsed it as well.

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