Congress fiddles while the economy burns

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Congress gonna drag their feet, tack on some earmarks...

Congress pushes back on bailout
September 22, 2008: Democrats want U.S. ownership stake in firms it helps. Industry wants plan to cover other kinds of debt.

On the eve of the first public discussion between lawmakers and the administration about the Treasury's $700 billion financial rescue proposal, the debate is being framed by a few key issues. Lawmakers from both parties, while acknowledging the urgency of the moment, nevertheless object to giving what they characterize as a "blank check" to Treasury Secretary Henry Paulson to buy troubled assets from financial institutions. They want provisions that would explicitly protect taxpayers.

"We don't have a lot of time. We want to act but we want to act responsibly," said Senate Banking Committee Chairman Christopher Dodd, D-Conn., at a press briefing Monday afternoon. Dodd's committee will hold a hearing on the bailout on Tuesday morning. The House Financial Services Committee will do the same on Wednesday. Paulson and Federal Reserve Chairman Ben Bernanke are scheduled to testify at both hearings.

Many lawmakers seem to be on board with giving Paulson the authority he seeks, but they want to add a few provisions. Senate Democrats circulated a counter proposal on Monday that would require the government to receive an ownership stake in the companies it helps. The proposal, offered up by Dodd, would require companies who sell assets to Uncle Sam to give the government shares in the company, according to a draft obtained by CNN.

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Financial Meltdown: Where Does the Buck Stop?
Monday, September 22, 2008 – In taking over American International Group (AIG) last week, the federal government took control of its first insurance company and engineered its fourth bailout of a major financial institution this year, further injecting itself into the economic life of the nation while catalyzing heated debate on causes and cures.

Both presidential candidates have said the bailouts of AIG, Fannie Mae, Freddie Mac, and Bear Stearns were necessary measures. Republican John McCain blamed greedy Wall Street tycoons, while Democrat Barack Obama blamed failed Republican economic policies. According to Sheldon Richman, editor of The Freeman and an economist with the Foundation for Economic Education, government policy is to blame.

“The biggest culprit, I think, is the implicit guarantee the government has always issued to Fannie Mae and Freddie Mac,” Richman said. “Something like 80% of the mortgages these days are held or backed by Fannie Mae or Freddie Mac,” he said, and “they get special treatment from the government like no other lender gets.” These factors, particularly the government guarantee, have brought about our current financial crisis, said Richman.

Fannie Mae and Freddie Mac have been able to buy bundles of home mortgages, or mortgage-backed securities, in massive quantities without real-world considerations of financial risk, because they could count on the federal government to bail them out if things went south. “We don’t call them ‘Government Sponsored Enterprises’ for nothing,” Richman said.

More http://www.cnsnews.com/public/conten...x?RsrcID=36048

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Business as usual...

Congress and the Bailout Plan: Business As Usual
Tuesday, Sep. 23, 2008 - "Give a Democrat a pen ...," grumbled one Republican Senate staffer Monday as he compared Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke's three-page plan to rescue the American financial system to the 40-plus-page proposal they got in response from the Democrats.

And by that page ratio alone, it might look to the untrained eye as if Paulson's bailout package was headed for failure, an outcome that spooked markets to another day of stomach-churning 4% and 5% drops on Monday.

Tuesday's Senate Banking Committee hearing on the bailout may not reassure anyone. Paulson argued that the Bush Administration's plan is "the single most effective thing we can do to help homeowners, the American people, and stimulate our economy." And he stressed that despite fears on Capitol Hill, he does believe there should be some oversight of the unprecedented bailout. But Democrat Chris Dodd of Connecticut declared, "It is not just our economy at risk but our Constitution as well," while ranking minority member Richard Shelby of Alabama, a vocal critic of the plan, said, "I have long opposed government bailouts for individuals and corporate America alike ... We have been given no credible assurances that this plan will work."

Shelby is likely to oppose the plan, but much of its scrutiny on Capitol Hill is, in fact, Congress doing what Congress does, albeit on a massive, once-in-a-lifetime scale. On any given day on the Hill well-heeled lobbyists graft slivers of language onto obscure bills, language that ends up being worth huge amounts to their clients. This week the U.S. financial system is going to be reordered on a scale unseen since F.D.R., and everyone has an interest in that, sometimes to the tune of hundreds of billions of dollars. In the massive bazaar of legislative trading that is the U.S. Congress, America's elected Representatives are out to get what they can for their most important constituents — be it an equity stake in the companies that the government helps, more aid for struggling homeowners or new limits for executive compensation on Wall Street, all add-ons that many Democrats are pushing.

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Bailout rewards bad behavior - poll
September 23, 2008: Eight out of ten say the economy could deteriorate further if government action is not taken, according to poll, but similar percent also worry bailout rewards bad behavior.

As the White House and Congress hammer out the details of a rescue plan for embattled financial institutions, Americans worry that it may reward bad behavior but they also fear that doing nothing may hurt the economy, according to a poll released Tuesday. In a CNN/Opinion Research poll, 79% of 1,020 respondents said they were worried that the economy could get worse if the government takes no action.

However, 77% also said they believed that a government bail-out would benefit those responsible for the economic downturn in the first place. The poll was taken on Sept. 19-21 and had a margin of error of plus or minus 3 percentage points. The Bush administration, under the guidance of Treasury Secretary Henry Paulson, has proposed that the federal government buy up approximately $700 billion in problematic assets from financial institutions in order to give them the liquidity they need to stay afloat.

Democratic lawmakers have pushed for a number of additions to the bill, including additional oversight, protections for homeowners and caps on executive compensation. According to the CNN poll, fully half of respondents said there is too little regulation of the stock market and financial institutions.

The two presidential candidates, Democrat Barack Obama and Republican John McCain have also said there needs to be more government oversight of the bailout plan. Through it all, Americans remain optimistic. While a great majority said they believed the economy was struggling, according to the poll, more than two-thirds said they thought the economy would be in good shape a year from now.

Source

[waltky]

Oops, hey folks, good times is over with, the economy isn't quite as fundamentally sound as I thought it was...

Bush warns of 'long and painful recession'
24 Sept.`08 WASHINGTON - President Bush said Wednesday that lawmakers risk a cascade of wiped-out retirement savings, rising home foreclosures, lost jobs and closed businesses if they fail to act on a massive financial rescue plan. "Our entire economy is in danger," he said.

"Without immediate action by Congress, American could slip into a financial panic and a distressing scenario would unfold," Bush said in a 12-minute prime-time address delivered from the White House East Room that he hoped would help rescue his tough-sell bailout package. "Ultimately, our country could experience a long and painful recession." Said Bush: "We must not let this happen."

The unprecedented $700 billion bailout, which the Bush administration asked Congress last weekend to approve before it adjourns, is meeting with deep skepticism, especially from conservatives in Bush's own Republican Party who are revolting at the high price tag and massive private-sector intervention by government. Though there is general agreement that something must be done to address the spiraling economic problems, Bush has been forced to accept changes almost daily, based on demands from the right and left.

Seeking to explain himself to conservatives, Bush stressed he was reluctant to put taxpayer money on the line to help businesses that had made bad decisions and that the rescue is not aimed at saving individual companies. He tried to address some of the major complaints from Democrats by promising that CEOs of failed companies won't be rewarded, while warning he would draw the line at regulations he determined would hamper economic growth.

"With the situation becoming more precarious by the day, I faced a choice: to step in with dramatic government action or to stand back and allow the irresponsible actions by some to undermine the financial security of all," Bush said. The president turned himself into an economics professor for much of the address, tracing the origins of the problem back a decade.

More Bush warns 'entire economy is in danger' - Yahoo! News

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Palin: US Could Face Another Great Depression
Wed Sep 24, `08 - Republican vice presidential candidate Sarah Palin said Wednesday that the United States could be headed for another Great Depression if Congress doesn't act on the financial crisis.

Palin made the comment in an interview with CBS evening news anchor Katie Couric while visiting New York to meet foreign leaders for the first time in her political career. As Palin sought to establish her credentials in world affairs, first lady Laura Bush said that Palin lacked sufficient foreign policy experience but was "a quick study." Recent surveys have shown that Palin's popularity, while still strong, has begun to fade.

Earlier this month, an Associated Press-Yahoo News poll showed more people viewing Palin favorably than unfavorably, 47 percent to 28 percent. But an ABC News-Washington Post poll released Wednesday showed that in a two-week period, the number seeing Palin positively dropped 6 percentage points while 10 points more see her unfavorably. On Monday, a CNN-Opinion Research Corp. poll said her favorable rating dropped 4 points and her unfavorable rating rose 8 points over two weeks.

Palin has been in New York this week for a series of meetings with foreign leaders, part of an effort by Republican John McCain's presidential campaign to counter criticism that the former small-town mayor lacks the experience to be vice president, let alone president in an emergency. The CBS interview was just her third major interview in nearly four weeks on the GOP presidential ticket. Asked whether there's a risk of another Great Depression if Congress doesn't approve a $700 billion bailout package, Palin said, "Unfortunately, that is the road that America may find itself on."

More Palin: US could face another Great Depression - Yahoo! News

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It's fallin' apart...

Tentative bailout deal unravels
25 Sept. `08 WASHINGTON - Paulson, Bernanke to meet with Congressional leaders to revive agreement

Urgent efforts to lash together a $700 billion rescue plan for the national economy appeared to be stalling Thursday night, hours after key lawmakers had declared they had reached a deal. Weary congressional negotiators hurried back to work, joined by Treasury Secretary Henry Paulson in an effort to revive or rework the proposal that President Bush said must be quickly approved by Congress to stave off economic disaster. Congressional leaders said Federal Reserve Chairman Ben Bernanke might come to Capitol Hill, too, if enough progress was made. The meetings were to continue into the night.

After six days of intensive talks on the unprecedented package proposed by the Bush administration, with Wall Street tottering and presidential politics intruding six weeks before the election, there was more confusion than clarity. The day’s earlier apparent breakthrough, announced with fanfare at midday, was followed by a White House summit bringing together President Bush, presidential contenders John McCain and Barack Obama, and top congressional leaders. But that meeting, aimed at showing unity in resolving a national financial crisis, broke up with conflicts in plain view.

Inside the session, House Republican leader John Boehner expressed misgivings about the emerging plan and McCain would not commit to supporting it, said people from both parties who were briefed on the exchange. They spoke on condition of anonymity because the session was private. The earlier agreement by key members of Congress from both parties — but not top leaders — would have given the Bush administration just a fraction of the money it wanted up front, subjecting half the $700 billion total to a congressional veto.

More Tentative agreement on bailout falls apart - Stocks & economy - MSNBC.com

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U.S. gets a triple dose of bad economic news
25 Sept.`08 WASHINGTON - Home sales tumble, jobless rate soars, durable goods orders plunge

Weekly jobless claims surged to the highest level in seven years, durable goods orders took a bigger-than-expected tumble and new home sales plunged to the slowest pace in 17 years, according to government data released Thursday. The latest trifecta of bad news about the economy raised new worries about a possible recession and underscored the concerns that are driving Congress and the White House to reach agreement on an historic bailout of the financial system. The Labor Department reported that jobless claims jumped by 32,000 to a seasonally adjusted 493,000 last week, the highest level since shortly after the Sept. 11, 2001 terrorist attacks and far above what economists had been expecting.

Labor Department analysts said that Hurricanes Ike and Gustav added about 50,000 claims, but even discounting the adverse impact from job disruptions in Louisiana and Texas, the four-week average for claims rose to 445,000, the highest it has been since November 2001, the month the last recession ended. In a second report, the Commerce Department said that new orders to factories for big-ticket manufactured goods fell by 4.5 percent last month, led by a big drop in demand for airplanes but also reflecting weakness in everything from autos to primary metals and machinery.

It was the largest setback since a 4.7 percent fall in durable goods orders in January and raised worries that the weakening economy was causing corporations to cut back on their investment spending plans. The third weaker-than-expected report showed that new home sales plunged by 11.5 percent in August, a much bigger decline than the 1 percent dip that had been expected. It pushed sales down to a seasonally adjusted annual rate of 460,000, the slowest pace since January 1991.

More http://www.msnbc.msn.com/id/26892814/

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Granny says, "Oh goodie, dey protestin' just like back inna 60's...

Protestors Lash Out At Bailout Plan
Sept. 27, 2008 - At Rallies Large And Small Around The Country, Taxpayers Speak Out About The Bush Admin.'s Economic Rescue Plan

As Democratic and Republican leaders hashed out a compromise to the Bush administration's proposed $700 billion bailout of struggling banks, Americans took to the streets. In Denver, several dozen protesters gathered Friday on the steps of the state Capitol to oppose the proposed federal bailout of the financial industry. The protesters shouted "Jail them, not bail them," and "Main Street, not Wall Street." Protesters included members of the Colorado Green Party, union workers and the Rocky Mountain Peace and Justice Center.

Center spokeswoman Carolyn Bninski told the small but vocal crowd that greedy bankers and investors were responsible for the current crisis. She said taxpayers shouldn't bail them out. Also yesterday in Washington, demonstrators with signs picketed outside the U.S. Treasury Department. Rainbow PUSH coalition founder Jesse Jackson, who headlined the Washington demonstration against the financial bailout, urged a hold on further foreclosures and allowances for people to restructure their mortgage deals.

And in New York, a demonstration sponsored by the group Bail Out People Before Bankers was held in Times Square on Saturday. This followed Thursday's massive demonstration where thousands descended on Wall Street to oppose the administration's proposal to spend up to $700 billion of taxpayers' money to relieve banks of their bad debt. Other demonstrations of opposition to the plan - some spontaneous, others quickly organized over the Internet - have been sighted in Akron, Ohio; San Francisco; Austin, Tex.; Chicago; Green Bay, Wis.; Portland, Ore.; Newark, N.J.; Ventura, Calif.; and Greenville, S.C.

Protestors Lash Out At Bailout Plan, At Rallies Large And Small Around The Country, Taxpayers Speak Out About The Bush Admin.'s Economic Rescue Plan - CBS News

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Economy Cracks Many Nest Eggs
Sept. 26, 2008 - Retirees On Edge About Whether Savings Will Last

Walter Lawrence was living retirement on Easy Street - until Wall St. scrambled his nest egg. "I had a lot of money," Lawrence said. "Today I don't have a lot of money." Half his savings are gone, without him spending a dime, CBS News correspondent Mark Strassmann reports. It's a financial distress call for millions of retirees: America's economy, burning through their assets. Lawrence can spot an emergency. He's a retired Atlanta firefighter and after twelve years, he may have to go back to work, doing something.

"I doubt you would find too many people who would hire a 67-year-old," Lawrence said. "Then what would you do?" Paul Nelson would never have retired at all. He saved, planned, invested for a long walk down the fairway. But his investments are down 25 percent. "They used to say you need X amount of dollars to retire," Nelson said. "I don't think anybody could say right now what you would really need to retire. There's no way."

Even before this week's upheaval, at 18 percent, few American workers were very confident they'd have enough money for retirement. And most retirees have more financial worries now than the day they retired. More Americans older than 55 are still working now than at any time since 1970. And with the economy now in turmoil, labor experts predict more anxious older workers will be forced to put off retirement, Strassmann reports.

More http://www.cbsnews.com/stories/2008/...n4481763.shtml

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Day to day operations should not be financed on credit. No wonder we're in this mess. Some people got no business being in business...

Credit freeze and your paycheck
September 28, 2008: Businesses are finding it hard to get credit to fund their daily operations. But experts question the impact on the wider economy.

Is it even harder now for businesses to get credit from banks? No question. Does that mean that the American economy will crumble within weeks if the government's $700 billion bailout of Wall Street doesn't pass? No telling. In the wake of last week's demise of Lehman Brothers and last-minute government bailout of American International Group, the credit markets have all but frozen. What this means for businesses is that they are having a tougher time just getting funding even for their day-to-day operations, never mind securing loans for expansion projects.

While the credit crunch is more than a year old already, two things have changed in recent weeks. First, investors have cut off a major financing source of large corporations by shying away from buying their commercial paper, or ultra short-term debt. Also, since banks are now holding onto their money even more, they are either not extending lines of credit to companies or are instituting more onerous terms. Businesses of all sizes depend on this funding to buy supplies and inventory, make payroll and extend credit to customers while waiting for payments to come in.

Most businesses don't keep much cash on hand. They rely on banks' lines of credit to cover them until they get paid by their customers. What does that mean for companies and their employees? Economists are divided, with some predicting dire consequences and others saying most can weather the financial storm for now.

Can't live without credit

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Dow down more than 500 points as House leaders struggle to secure votes to pass bailout
29 Sept.`08 WASHINGTON - Massive bailout plan appears in jeopardy; Debate prior to balloting showed deep reservations about $700 billion plan

A $700 billion bailout was in jeopardy in the House today following extended debate where many members, including some who brokered the deal, acknowledged it was highly unpopular. Members had a limited amount of time to change their votes following the closing of voting. Following the deadline, the margin was growing for those opposed to the measure.

Even as the electronic roll call began, Democratic and Republican leaders were uncertain about having enough votes to pass the politically unpopular plan. It's the most sweeping government intervention in markets since the Great Depression. The bailout puts in place an unprecedented federal program to buy up rotten assets from cash-starved firms. The goal is to free up choked credit that was threatening to cause broader market turmoil.

"Many of us feel that the national interest requires us to do something which is, in many ways, unpopular," said Rep. Barney Frank, the Financial Services Committee chairman, before the vote. "It is hard to get political credit for avoiding something that has not yet happened." The bill was the product of marathon bargaining over the weekend among various House and Senate representatives.

More http://www.msnbc.msn.com/id/26884523/

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The people have spoken...

Why the bailout bombed
WASHINGTON (Fortune) -- September 29, 2008: Republicans might blame Pelosi's rhetoric, but the message that mattered was the one that came from voters back home.

Barely containing his temper, Virginia's Eric Cantor, deputy whip for the House Republicans, stepped to the microphone this afternoon to blame the bailout defeat on House Speaker Nancy Pelosi's "failure to listen" and her charged partisan rhetoric in condemning President George Bush's "budgetary recklessness" and "anything-goes mentality."

If only it were that simple. If only the failure of the White House to muster enough votes from its own party to avert what it calls looming financial disaster could be blamed on a few ill-chosen words uttered on the House floor by San Francisco's hyper-partisan speaker.

In fact, Monday's surprise defeat of the $700 billion rescue package - meant to blunt a burgeoning financial crisis - can be traced to a failure on the part of the president and his treasury secretary, Henry Paulson, to fully appreciate the ferocity of the popular revolt they touched off nine days ago.

Republicans today voted against the measure by two to one. With only 60% of Democrats also voting in favor, the plan to have the government buy up hundreds of billions in assets, mostly mortgage-backed securities, went down to defeat.

The voters said no

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What good will a $700B bailout do against this??...

The $55 trillion question
September 30, 2008: The financial crisis has put a spotlight on the obscure world of credit default swaps - which trade in a vast, unregulated market that most people haven't heard of and even fewer understand. Will this be the next disaster?

As Congress wrestles with another bailout bill to try to contain the financial contagion, there's a potential killer bug out there whose next movement can't be predicted: the Credit Default Swap. In just over a decade these privately traded derivatives contracts have ballooned from nothing into a $54.6 trillion market. CDS are the fastest-growing major type of financial derivatives. More important, they've played a critical role in the unfolding financial crisis. First, by ostensibly providing "insurance" on risky mortgage bonds, they encouraged and enabled reckless behavior during the housing bubble.

"If CDS had been taken out of play, companies would've said, 'I can't get this [risk] off my books,'" says Michael Greenberger, a University of Maryland law professor and former director of trading and markets at the Commodity Futures Trading Commission. "If they couldn't keep passing the risk down the line, those guys would've been stopped in their tracks. The ultimate assurance for issuing all this stuff was, 'It's insured.'"

Second, terror at the potential for a financial Ebola virus radiating out from a failing institution and infecting dozens or hundreds of other companies - all linked to one another by CDS and other instruments - was a major reason that regulators stepped in to bail out Bear Stearns and buy out AIG (AIG, Fortune 500), whose calamitous descent itself was triggered by losses on its CDS contracts (see "Hank's Last Stand").

And the fear of a CDS catastrophe still haunts the markets. For starters, nobody knows how federal intervention might ripple through this chain of contracts. And meanwhile, as we'll see, two fundamental aspects of the CDS market - that it is unregulated, and that almost nothing is disclosed publicly - may be about to change. That adds even more uncertainty to the equation.

"The big problem is that here are all these public companies - banks and corporations - and no one really knows what exposure they've got from the CDS contracts," says Frank Partnoy, a law professor at the University of San Diego and former Morgan Stanley derivatives salesman who has been writing about the dangers of CDS and their ilk for a decade. "The really scary part is that we don't have a clue." Chris Wolf, a co-manager of Cogo Wolf, a hedge fund of funds, compares them to one of the great mysteries of astrophysics: "This has become essentially the dark matter of the financial universe."

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Ron Paul on the bailout...

Ron Paul: Buying bad debt is the wrong solution
October 1, 2008 -- Paul: Bailout is bad for taxpayers, sticks to policies that caused economic troubles; "You have to allow the market to adjust prices downward," he says; Crisis putting pressure on dollar, could force world to give up on it, Paul says; Paul: Increasing insurance limits would "cover over the mistakes"

Two days after the House rejected the $700 billion bailout bill, the Senate is set to vote on the rescue plan for financial institutions. The vote is scheduled for after sundown Wednesday. Republican presidential nominee Sen. John McCain, Democratic nominee Sen. Barack Obama, and Obama's running mate, Sen. Joe Biden, all said they would be present for the vote.

Speaking to CNN's John Roberts on Wednesday, House Financial Services Committee member and former Republican presidential candidate Rep. Ron Paul discussed why he thinks the bailout bill is the wrong solution to the economic problem and what he would do to secure financial security.

John Roberts: Congressman, great to see you. I was browsing around on your Web site, Campaign for Liberty. And right there on the very front page, you are appealing to your supporters -- and there are tens of thousands of them -- to get in touch with key senators to tell them to vote this bill down when it comes to a vote in the Senate at sundown tonight.

Why do you want them to vote it down?

Rep. Ron Paul: I think it's a bad bill. I think it's bad for the taxpayers. I think it's doing more of the same thing. The same policy that we're following now with this bill is exactly how we got into that trouble. And you know, I really don't have that much clout in Washington, D.C. And I recognize it. But there are a couple people outside of Washington that care about what I'm thinking and care about free market ... economics. And they will respond. And I think we did help generate a little bit of mail to the House members. So you go where you can have the influence. And I think that people -- the grassroots -- understand this a lot better than members of Congress give them credit for.

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‘We Chose Panic,’ Senate’s Top GOP Banking Expert Declares as He Rips Bailout
Thursday, October 02, 2008 - The leading Republican on the Senate Banking Committee systematically shredded the $700-billion financial industry bailout bill in a speech delivered on the Senate floor last night shortly before the bill passed by a 75-24 vote.

Sen. Richard Shelby (R.-Ala.) concluded his indictment of the bill by telling Senate colleagues: “The choice we faced was between pursuing an informed response, or panic. I think we chose panic.” The bill’s principal provision, like the bailout bill rejected in the House of Representatives on Monday, would provide up to $700 billion to the Treasury Department to buy mortgage-backed securities from financial institutions. The bill would also authorize federal agencies that come into ownership of these securities to rework the underlying mortgages at risk of defaulting, decreasing the amount of principal and interest people owe on their houses.

Sen. John McCain (Ariz.), the Republican presidential candidate, and Sen. Barack Obama (Ill.), the Democratic presidential candidate, both returned to the Senate from the campaign trail to join with the Senate leadership of both parties in voting for the bill. But Shelby, who has served in Congress since 1978, and who was chairman of the Banking Committee when the Republicans controlled the Senate, delivered a brief history of why he believes Congress itself caused the current financial crisis and why the action Congress took last night is unlikely to solve it.

He argued that the roots of the crisis can be found in well-intentioned attempts by members of Congress to conduct “social engineering” by deliberately loosening credit standards. “The free market didn’t fail, the federal policies that created a false market did,” said Shelby. He held up as major culprits behind the financial crisis the 1995 expansion the Community Reinvestment Act (CRA) under President Clinton and the loosening of mortgage standards under Fannie Mae and Freddie Mac, which were promoted by Democratic members of Congress. The CRA, originally enacted under President Carter in 1977 and expanded under President Clinton in 1995, required banks to make more loans in inner cities and lower income communities.

More http://www.cnsnews.com/public/conten...x?RsrcID=36716

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Financial crisis and entitlements...

Congress Unlikely to Fix $53 Trillion Entitlement Shortfall This Year
Tuesday, October 07, 2008 – While Congress and President Bush moved quickly to pass a $700 billion financial bailout last week, they have not moved swiftly to address the $53 trillion shortfall owed to the American people in entitlements such as Social Security and Medicare.

The General Accounting Office estimates that the current total owed to Americans in federal benefits, but for which there are no funds available, is $53 trillion. When asked about this funding crisis on Friday, members of Congress told CNSNews.com that an effort to fix the problem likely would not occur before the end of this year. “I’ve thought for a long time around here that Congress thinks it can repeal the laws of mathematics,” Rep. Trent Franks (R-Ariz.) told CNSNews.com. “We need to get an adult in the White House, and we need John McCain. “If (Barack) Obama comes to the White House with some of these great challenges we are facing, his answer will be to socialize our system, and we will see the greatest capitalist economy in the history of the world fall. We can’t let that happen,” he said.

Rep. Charlie Dent (R-Pa.) said that Congress will have no choice but to address entitlements in the near-future if additional strains to the U.S. financial system are to be avoided. But even with the GAO report about the $53 trillion shortfall, Dent was not certain any action will be taken this year. “I can’t say the Congress will move, but I think we should,” he said. “Entitlement reform is an issue we are going to have to pick up. Whether or not the chairman of the Ways and Means Committee is going to be in a position to do it, remains to be seen.”

Looking ahead, there are “a lot of projected shortfalls” where Medicare is concerned, in addition to what is noted in the GAO report, Rep. Rush Holt (D-N.J.) told CNSNews.com. “Medicare is one of our most important programs for Americans,” he said. “Overall, it has been very successful, and we want to preserve that program.” Holt also said he would be willing to explore the subject of how to fix the funding shortfall when Congress reconvenes.

More CNSNews.com - Congress Unlikely to Fix $53 Trillion Entitlement Shortfall This Year

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Recovering from Global Financial Crisis Won’t Be Easy, Bush Says
Tuesday, October 07, 2008 Washington (AP) - President Bush sought to assure Americans on Tuesday that the economy will eventually recover from the global financial crisis but he cautioned that it's going to take time and won't be easy.

"Right now we're in tough, tough times. No question about it," he said. "Have faith, this economy is going to recover over time," Bush said. "I wish I could snap my fingers and make what happened stop. But that's not the way it works."

With stock markets falling around the world and economic anxieties growing, Bush tried to address the fears of many Americans. "The days are dim right now for a lot of folks, but I firmly believe tomorrow's going to be brighter," Bush said. Bush acknowledged the steep drop in retirement funds and other savings. "I think in the long run they're going to be fine," Bush said. "In the short term they're going to take a hit."

Bush spoke at an office supply company in the Washington suburb of Chantilly, Va., after talks earlier in the day with European leaders. Bush pressed allies to coordinate their efforts to ease the financial crisis spreading around the globe. The White House said Bush was open to the idea of a leaders' summit on the economic upheaval.

More CNSNews.com - Recovering from Global Financial Crisis Won?t Be Easy, Bush Says