WASHINGTON — President Bush appealed to the nation Wednesday night to support a $700-billion plan to avert a financial meltdown on Wall Street, and he invited both major presidential candidates to join him and congressional leaders at the White House today to forge a bipartisan compromise.
Warning that "a long and painful recession" could occur if Congress does not act quickly, Bush said the consequences could play out in "a distressing scenario," including potential bank failures, job losses and inability for ordinary Americans to borrow money to buy cars or send their children to college.
"Our entire economy is in danger," he said in a message aimed at reluctant lawmakers as much as a deeply skeptical public.
The address, and the extraordinary offer to bring together Sen. Barack Obama, the Democratic presidential nominee, and Sen. 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.
The prime-time address came at a time when deep public unease about shaky financial markets has been coupled with skepticism and anger directed at a government bailout that would be the most expensive in American history.
White House and administration officials have warned repeatedly of a coming "financial calamity," but that has not closed the deal, which for many recalls previous warnings of grave threats from Bush — such as before the Iraq war — that did not materialize.
The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade to a large influx of money into the U.S. system from overseas, low interest rates, the "faulty assumption" that home values would continue to skyrocket, easy lending by mortgage companies, over-borrowing by homeowners and exuberant building by construction firms.
But while generally acknowledging risky and poorly thought-out financial decisions at many levels of society, Bush never assigned blame to any specific entity, such as his administration, the quasi-independent mortgage giants Fannie Mae and Freddie Mac, or the Wall Street firms that built rising profits on increasingly speculative mortgage-backed securities.
Instead, he spoke in terms of investment banks that "found themselves saddled with" toxic assets and banks that "found themselves" with questionable balance sheets.
On Capitol Hill, delicate negotiations between Treasury Secretary Henry Paulson and Democratic and Republican leaders on the bailout plan were complicated by a backlash from rank-and-file lawmakers hearing complaints from constituents.
Bush acknowledged that the bailout would be a "tough vote" for lawmakers.
For the first time, the administration signaled that it would be willing to make major concessions to secure congressional approval, including limits on pay of executives whose companies seek government assistance and a plan to give taxpayers an equity stake in some of the firms.
Sen. Christopher Dodd, D-Conn., chairman of the banking committee, predicted that a deal could come together as early as today.
Paulson, facing a second day of questioning by lawmakers, tried to focus as much on Main Street as Wall Street. "Every business in America relies on money flowing through the financial system every day," he said.
Paulson's comments about limiting the pay of executives signaled the biggest shift in the White House position.
"The American people are angry about executive compensation, and rightly so," said Paulson, who received hundreds of millions of dollars as the chief executive of Goldman Sachs. "No one understands pay for failure."
House Republicans have emerged as the most difficult bloc of votes, with moderates fearful of the price tag and conservatives opposed to the rejection of free-market principles implicit in the plan.
The backlash from constituents, in phone calls and e-mail messages, is putting lawmakers in a quandary as they weigh what many regard as the most consequential decision of their careers.
"I am hoping Congress can find the backbone to stand on their feet and not their knees before BIG BUSINESS," one correspondent wrote to Rep. Jim McDermott of Seattle.
McDermott is a liberal Democrat, but his e-mail messages look a lot like the ones that Rep. Candice Miller, a conservative Republican from Michigan, is receiving. "NO BAILOUT, I am a registered Republican," one constituent wrote.