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Bailout blues may help define Bush term

Photo

Photo by AP Photo/Frank Franklin II

President Bush addresses the 63rd session of the United Nations General Assembly at UN headquarters, Tuesday.

WASHINGTON — Talk about a rough way for a Republican president to end two terms in office: The era of big government is back.

Just when the war in Iraq is going better, President Bush finds himself with a domestic crisis so vast it could redefine how he is remembered. To save a tanking economy, Bush is backing a bailout of historic proportions, brimming with federal intervention and taxpayer risk and a pile more debt.

Bush did promise to sprint to the finish. No one expected Wall Street to line the track with hurdles.

Aggressive lending to people with spotty credit led to record foreclosures, which imperiled investment houses and froze credit, the lifeblood of the economy. The upshot for people trying to make sense of it all: plummeting stock values, rising unemployment, shrinking confidence.

It could be much worse. And it will be. That is, Bush says, unless Congress acts fast to approve a bailout plan worth a staggering $700 billion.

The president acknowledges that people are wondering who is at fault.

His response: "Now is not the time to play the blame game. There's plenty of time to analyze the situation."

That's all relative. There is not plenty of time in the Bush presidency. His term ends in less than four months.

Yet there is time left to shape how Bush's tenure will be defined. No matter how much his administration raised warnings about risks in the financial system, no matter how much the private sector is the one that went off the rails, one of the biggest financial crises in generations still happened on Bush's watch.

"This has the potential to move up there in the first tier," said Ken Duberstein, a Republican strategist and former chief of staff to President Reagan. Describing history's likely take on Bush, he said: "9/11 is in there. Katrina is in there. The Iraq war. And the financial crisis that we're experiencing now."

In scrambling to fix the problem, seldom have so many leaders moved toward a plan they dislike so much.

Bush's chief spokesman on the matter, Treasury Secretary Henry Paulson, says he hates having to do it.

So do conservative lawmakers from Bush's own party. Altering the free-market system is not exactly part of their election-year platform.

And, of course, Democrats are all over Bush for letting this happen, even though multiple players are at fault.

Bush himself, a man of gut instinct, says he has to go against his own in this case. His experts have told him that government intervention is essential.

"Look, I'm sure there are some of my friends out there saying: 'I thought this guy was a market guy? What happened to him?'" the president said.

Events happened to him. Terrorist attacks early in his presidency, financial upheaval at the end.

Consider the Texas Gov. Bush who did well in presidential debates against Vice President Al Gore back in 2000. He scored points by stating forcefully that he was an advocate of less government and that he would not use the U.S. military as a force of nation-building.

Now he is poised to oversee a massive bailout, on top of the wars in Afghanistan and Iraq, where U.S. troops remain to help protect new democracies.

In the public's mind, expanding government to help protect the country is one thing. Even with weakened power, Bush still wins battles on national security.

But helping Wall Street giants? Spending taxpayer money to make up for other people's bad decisions? There's no love for that.

Lawmakers are likely to go ahead anyway. Inaction on a teetering economy is acceptable to no one. The prospects of a bill passing soon seem strong.

Still, Bush is getting hit from all sides. The shots from inside his party always stand out a little more.

Conservatives don't like hearing a Republican president describe a bailout this way: "You bet it's big, because it needed to be big."

Former House Speaker Newt Gingrich said the plan that Bush and Paulson are pushing is a "very un-Republican idea." Texas Rep. Jeb Hensarling, a leader of conservatives in the House, said, "We are concerned that the federal government is becoming the lender and guarantor of last resort."

The White House says Bush is being practical, not betraying principle about smaller government. He defers to his experts in the field. One of them, Federal Reserve Chairman Ben Bernanke, warned plainly that the economy will head closer to recession and not be able to recover normally without the bailout bill.

"I think people understand that the philosophy you have can be one way, but you have to be realistic," Duberstein said. "If the experts are saying that if we didn't act we'd be in much worse shape, then the president had no good alternative. If that's the case, then the president acted wisely."

Besides, Bush says there is no such thing as an accurate short-term history. Time and perspective put bold decisions in a different light.

Yet White House aides already know some of Bush's best moves are sure to be overshadowed. Successfully fighting disease in Africa, raising educational expectations across America, building up American defenses against another terrorist attack — these are unlikely to make the first paragraphs of history.

Perhaps a story of resilience will, though. That's how Bush sees it.

"Since 2001," he said, "our economy has faced a recession, the bursting of the dot-com bubble, major corporate scandals, an unprecedented attack on our homeland, a global war on terror, a series of devastating natural disasters. Our economy has weathered every one of these challenges."

And now, there's one more.