WASHINGTON – President Bush extolled the fundamentals of the U.S. and global economy on Thursday but expressed concern in light of the subprime loan crisis, saying Americans applying for credit may not have entirely grasped the consequences of their choices.
"We've had a lot of really hardworking Americans, you know, sign up for loans, and the truth of the matter is they probably didn't fully understand what they were signing up for. And, therefore, I do believe it's the proper role for government to enhance financial, you know, education initiatives. And we're doing that. Got money in the budget to do that," the president said during a news conference in the White House's Brady press briefing room.
The delinquency rate on home loans was nearly 5 percent in the first three months of the year and the market of late has tumbled and recovered several times in recent weeks. The opening bell on Wall Street Thursday set off a wave of selling, prompted by a French bank's announcement earlier in the day that it is freezing its assets because it cannot determine how much of its money is caught up in the U.S. subprime market.
Bush said that people who lose their homes should receive "enormous empathy" from Americans, but he is confident the housing market can help people refinance many loans and government interference is unnecessary. He also suggested that people become more financially literate before diving into a large loan.
But the president ruled out any bailout of homeowners hit with foreclosures in the form of direct assistance.
"The word bailout — I'm not exactly sure what you mean. If you mean direct grants to homeowners, the answer would be no," the president said.
Speaking to reporters at the White House before taking off for a long weekend at his father's retreat in Kennebunkport, Maine, Bush said that to stay competitive in the global marketplace, America must continue to be leaders in creativity and talent.
"Our economy is growing in large part because America has the most ambitious, educated and innovative people in the world," Bush said at the outset of the conference.
To aid that effort, he signed H.R. 2272, the America Competes Act of 2007, which is aimed at better positioning the country to compete in the global economy. The measure calls for spending $33.6 billion over the next three years for science, technology, engineering and mathematics research and education programs across four federal agencies.
"The bill I will sign today will ensure we remain the most competitive and innovative in the world," he said before putting pen to paper.
Later, Bush added that during a meeting with his economic team on Wednesday he was briefed on the decline in housing prices, and after war-gaming a number of scenarios the group had concluded that they expect a soft landing for the market.
With the economy rolling, but concerns about the U.S. infrastructure and mortgage delinquencies, Bush said he thinks the U.S. can sustain the level of funding on troops in Iraq. Despite disagreement about the mission, he said, no one should object to providing every resource needed by U.S. troops on the ground.
The question of priorities came in light of last week's bridge collapse over the Mississippi River in Minneapolis. About $24 billion, or 8 percent of the last $286 billion highway bill, was devoted to highway and bridge projects singled out by lawmakers. The balance is sent in the form of grants to states, which then decide how it will be spent. Federal money accounts for about 45 percent of all infrastructure spending.
Last week, Rep. Jim Oberstar, D-Minn., head of the House Transportation and Infrastructure Committee, suggested that the country could raise the billions of dollars that would be needed to fund repairs on 70,000 bridges defined as "structurally deficient" by raising the gas tax by 5 cents per gallon. The gas tax is currently 18.3 cents per gallon.
At least five people died in the accident on the I-35W highway. But raising taxes at this point would not be the correct solution, he said.
"As you probably know the public works committee is the largest committee, one of the largest committees in the House of Representatives. From my perspective the way it seems to work is that each member on that committee gets to set his or her own priority first. And then whatever's left over is spent to the funding formula. That's not the right way to prioritize the people's money," the president said.
But the president pledged that his administration is doing whatever it can to determine that America's bridges are safe. He is currently awaiting a report from Transportation Secretary Mary E. Peters before deciding on how to address the ailing bridges in the U.S.
"The American people need to know that we're working hard to find out why the bridge did what it did so that we can assure people that the bridges over which they'll be traveling will be safe," he said.
In response to Bush's rejection of a higher gas tax, Oberstar issued a statement saying the president is ignoring the facts on the ground, literally.
"The president is sticking his head in the sand and hoping things will just work out. We need to move quickly to address this problem, it’s not going to fix itself. The money to do the job isn’t going to fall from the skies like manna from heaven," he said.
The president also faced questions about a number of issues, including the five-year running war in Iraq and political unrest in nuclear-armed Pakistan, an ally in the War on Terror. Iran has recently been blamed for a significant number of U.S. military deaths in Iraq as Tehran's Islamic regime feeds explosively formed penetrators (EFPs) and improvised explosive devices (IEDs) to Shiite insurgents there.
"There will be consequences for people transporting, delivering EFPs, IEDs to kill Americans in Iraq," Bush said without defining what those consequences would be.
Bush said Prime Minister Nouri al-Maliki is currently in Tehran to deliver the message that Iran's actions to destabilize Iran is not tolerable. He said al-Maliki understands that Iran's role is hurting his government's efforts to calm sectarian violence. If he came back from Iran to say otherwise, Bush would have to sit down and talk that out with him.
"Is he trying to get Iran to play more constructive role? I presume he is. My message to (Iran) is that when we catch you playing a non-constructive role, there will be a price to pay," he said.
Bush also said that the Iranian people should demand more from their government.
"Iran can do better. The government is isolating its people."
Following widespread reporting of statements by Barack Obama, a U.S. Democratic presidential candidate, that he would tell Pakistani President Pervez Musharraf that unless he helps root out terrorists in the northwestern mountains of Pakistan, the U.S. will do it for him, Bush tried a more tactful approach on encouraging cooperation with the embattled Pakistani leader.
He also refused to speak on Obama's comments, widely criticized as the mark inexperience by the Illinois freshman senator.
Bush called Pakistan a sovereign nation and said he hoped for a free and fair election in the country, following protests there over Musharraf's attempted firing of a judge who was expected to rule on legal challenges to Musharraf's bid for re-election to another five-year term
Bush noted that Musharraf is trying to help fight the War on Terror and would not confirm any state of the emergency in Pakistan after Musharraf pulled out of a conference in Afghanistan with President Hamid Karzai.
"I have made it clear to (Musharraf) that I expect there to be full cooperation in sharing intelligence, and I believe we have good intelligence sharing. I have indicated to him that the American people would expect there to be swift action taken if there's actionable intelligence on high-value targets inside his country," he said, adding that both nations have a common enemy.
The midmorning session was Bush's first full news conference since July 12 when he inaugurated the newly refurbished White House briefing room. Since then, he has had brief question-and-answer sessions with Britain's new prime minister, Gordon Brown, and Karzai.
The president's long weekend at the family retreat will be interrupted by a lunch Saturday with France's President Nicolas Sarkozy, who is vacationing in New Hampshire.
The president is to return to the White House on Sunday and then head out the next day for his Texas ranch. He will stay away from Washington while Congress is on its August recess, but has several trips scheduled, including a tête-a-tête with the leaders of Mexico and Canada on Aug. 20-21 in Ottawa.
The Associated Press contributed to this report.