The White House gave a newly nuanced description Wednesday of the U.S. economy, calling it a mixed picture and saying it ultimately will weather the current turmoil.
President Bush’s chief spokeswoman also defended the extraordinary federal takeover of sinking insurance giant American International Group Inc., while not ruling out further private-sector bailouts by Washington.
Press secretary Dana Perino said that help for other endangered corporations would be considered by the government on a “case-by-case basis.”
Among those pleading for Washington’s help, for instance, is the struggling U.S. auto industry, which has suffered massive losses but remains a backbone of the economy. A bill before Congress would give the companies billion in federal loans, a program established but not funded under an energy bill passed last year. Perino said the White House would not comment on that prospect until Congress decides whether to go ahead with approving the money.
Perino refused to repeat the White House’s standard line about the U.S. economy, often used by Bush, who has said that its “fundamentals are strong.” Republican presidential candidates John McCain used that phrase Monday, earning him ridicule from Democratic opponent Barack Obama as being out of touch. McCain later clarified that he meant that the fundamental strength of the American worker remained strong.
With those accusations and counteraccusations swirling in an election-campaign environment, Perino suggested Wednesday that this assessment no longer stands.
“It’s not clear-cut,” she said, because of a proliferation of both positive and negative economic indicators, sometimes coming on the same day.
“We are in a position of strength to be able to deal with this crisis,” Perino said. “It will take us awhile.”
In the most far-reaching intervention into the private sector ever for the Federal Reserve, the government stepped in Tuesday to rescue American International Group Inc. with an billion injection of taxpayer money. The government will get almost an 80 percent stake in the company.
Perino framed it as another move to protect the economy and save people from further harm.
Given AIG’s size and scope, the possible failure of the company appeared to pose a greater risk than the billion loan, she said. But while Perino said the terms require taxpayers to be paid back first, when asked whether taxpayers may not get their money back at all, she said, “That is true.”
Bush agreed with the loan for AIG at the White House on Tuesday after being presented with a recommendation from Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke during a meeting of economic advisers. Perino said it is more appropriate to describe Bush’s role as consulting on the move rather than approving it.
She said she understands why Americans would be confused that the government would be willing to put taxpayer money at risk for some companies and not others, and that putting federal money into the private sector might be seen as at odds with Bush’s conservative, free-market economic philosophy.
“We are dealing with very challenging times,” Perino told reporters. “You have a government that is willing to lead, act where appropriate, and govern to make sure that we limit broader financial harm to the economy.”
The president has been silent about the market turmoil since Monday. He canceled previously announced plans to talk about it on Tuesday, and Perino said he would not be heard from on the topic on Wednesday, either.
Bush has not held a full news conference in two months. Perino said the president is reluctant to hold a news conference because he believes reporters would try to draw him into the daily back-and-forth between the Democratic and Republican candidates to replace him and that that would be inappropriate.
“I grant you, you haven’t heard from him in a while,” she said.