Paulson asks Senate for keys to economy

In choosing which companies to save in this recent period, "We have acted on a case-by-case basis," but "more is needed," said Treasury Secretary Henry Paulson in a hearing today before the Senate Banking, Housing, and Urban Affairs Committee. Paulson sent a proposal to Congress that would give the Treasury Department $700 billion to buy out and run various companies the government plans to take over due to potential bankruptcy.

Paulson said that the government must "fundamentally and comprehensively address the root cause of this turmoil." That turmoil, he says, is the housing market. He said the housing market is "choking off the flow of credit which is so vitally important to our economy." Chairman of the Federal Reserve System Ben Bernanke echoed the sentiment that our economy will only improve when the housing market improves.

Many senators had similar problems with Paulson's proposal. Sen. Chris Dodd (D-Conn.) said of Paulson's proposal that, "It would do nothing to help even a single family save a home." Senator Chuck Schumer (D-N.Y.) said that any bill would have to account and include the taxpayers, housing market, oversight, and regulation. He used the acronym "THOR" to refer to those four issues. Sen. Chuck Hagel (R-Neb.) said that the proposal must include more accountability and transparency. He also said that Congress must drastically rethink its economic policies for "a 21st century global marketplace." Sen. Michael Enzi (R-Wyo.) said that because the proposed bill would cost each U.S. citizen approximately $2,300, they had to be accounted for.

Hoyer: Only President Hoover was worse

House Majority Leader Steny Hoyer (D-Md.) waded into presidential politics criticizing the Bush administration's policies as Republican are casting themselves of agents of change. "It's difficult to understand how somebody who voted with the administration 90 percent of the time can project themselves as an agent of change," he said in reference to Republican presidential nominee Sen. John McCain. Hoyer criticized job growth saying , "It's been one of the slowest eight years in recent history. You'd have to go back to the Hoover administration to see worse..." He also compared the job growth numbers in the last eight months of the Clinton administration with those of the past year.

He said that a comprehensive energy bill in the House is a possibility in the upcoming week. The House Republicans have been clamoring for their "All of the Above" energy bill to be brought to the floor since the session adjourned in August. One of the principle complaints has been the moratorium of new oil and natural gas drilling offshore. Hoyer said that the Republicans have been passing moratorium language for the last eight years without striking it in conference.

Hoyer said he had spoken with the Secretary of the Treasury Henry Paulson about the government take over of the mortgage giants Freddie Mac and Fannie Mae. Hoyers said that he agreed that this action was a necessary one at this point and time.

White House Gaggle

Briefer Scott Stanzel

Schedule
This morning the president had his normal briefings.
He will be meeting with the Secretary of Treasury, Henry Paulson for a regular update on the economy comments. The office on Community and Faith-Based Initiatives are having a roundtable today to talk about the role that faith-based groups may have in disaster preparedness and emergency response.

When asked if the president had any reaction to reports that Palestinian President Mahmoud Abbas said that he would resign if there is not any meaningful progress in the peace process, Stanzel said that he wasn’t sure if the president had discussed it in private meeting. He reiterated the president’s view that both Abbas and Israeli Prime Minister Ehud Olmert are two men who are committed to peace ad moving the process forward. Stanzel said that the president remains optimistic but that if it were an easy process it would have been resolved already.

The topic of the strategic oil reserve came up and Stanzel said the Congress did pass a bill to halt the fill of the strategic reserve. He said that the president will sign that legislation. While the White House thinks this measure won’t have a meaningful impact Stanzel said that President Bush is not going to stand in the way of it. Because of the legislation the Department Energy has to regularly enter into contracts to sustain the filling of the reserve. Stanzel said that the DOE took the initiative to not enter into new contracts because the legislation passed with such bipartisan support. Stanzel said that he hopes this legislation won’t distract members of Congress from real priorities, like increasing production in an environmentally sensitive way.

On the economy Stanzel said what is important to the White House is the question of what is being done about an economy that is not growing fast enough. The President is not satisfied with the .6% growth of the first half of the year. Stanzel said that the president has confidence in the business tax incentives, and the tax rebates. They are concerned that the Congress don’t pass new tax increase and is focused on action and results. Stanzel said that the White House wants to make sure we strengthen the legislation that oversees Freddie Mac and Fannie Mae and that the administration hopes that Congress can move forward on FHA modernization and GSE reform.