Bush Warns Against Overcorrecting for Struggling Economy, Pushes Trade Agenda

JACKSONVILLE, Fla. – President Bush said Tuesday his administration is prepared to take fresh action — if necessary — to bolster the nation's flagging economy and financial sector.

"If there needs to be further action we'll take it," Bush said during a speech on trade along the docks of this city's port.

However, the president said his administration would act only "in a way that does not damage the long-term health of our economy." He wasn't specific about what sort of action this would preclude.

But Bush has in the past rejected Democratic lawmakers' ideas on the economy. They include proposals to help struggling families by extending unemployment and food stamp benefits and sending aid to strapped states and to prevent homeowners from foreclosure by allowing bankruptcy judges to adjust loan rates.

At the root of the economy's woes is the collapse of the subprime mortgage market. The problem has spread from one faced by homeowners to a severe credit squeeze in the financial sector. Bush said "it's going to take time to work through this oversupply" in the housing market, but suggested that the financial market may need additional help.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke "will continue to closely monitor the markets and the financial sector" to determine what is needed, Bush said.

The Fed has approved a series of interest-rate cuts — including another on Tuesday — and over the weekend became the lender of last resort for troubled investment banks. The Fed also gave government backing to the takeover by JPMorgan Chase & Co. of Bear Stearns to help keep the stricken investment bank — one of the nation's largest — from collapse.

"It was action that was necessary," Bush said.

He talked about the spreading economic crisis during a speech aimed at pushing a pending trade agreement with Colombia that faces a steep climb in the Democratic-controlled Congress.

"This isn't just one of these isolated votes that gets no attention outside of Washington," Bush said after touring a cargo shipping company. "This is a vote that is being observed very carefully by people across the world."

The deal would remove most tariffs on American exports and cement Colombia's preferential trade status with the United States, which allows it to sell many products here duty-free.

But Bush casts the deal in terms much broader than a trade pact between two countries. He says it is a way to promote progress in a place where terrorists can otherwise prey on poor people. Bush goes so far as to say the collapse of a deal will rob the U.S. of trust and influence across all of South America.

Democrats, though, remain concerned about whether Colombia's government has done enough to halt violence, protect labor activists and demobilize paramilitary fighters.

Also while in Florida, the state that cemented his first bid for the White House, Bush is raising more than $1.4 million for Republicans.

A lunchtime fundraiser in Jacksonville is generating $685,500 for the Republican National Committee. The host is John D. Rood, the former U.S. ambassador to the Bahamas. Later, the president was heading about 290 miles south to Palm Beach for a reception expected to raise $762,000 for the RNC. Both events are closed to reporters.