Bush Forced Into 'Diminished Role' in Economic Crisis

Oct. 9, 2008 — -- President Bush has tried to reassure Americans and the stock market that the U.S. economy will be all right, but the certainty of his words has steadily eroded in recent days and have had little impact -- at least any positive impact.

Bush began edging toward the exit today by signing an executive order that starts the transition to a new administration. But even before the paperwork was signed, Bush's unease as his term winds down was strikingly on display earlier this week when he traveled to the Washington suburb of Chantilly, Va., to speak with small-business owners who sat on folding chairs in an office supply company to hear him explain what he was doing to restart the flow of credit.

After Bush spoke, one man explained to the president in an urgent tone that his $3.5 million business had just been told by his banker that it would be more expensive to roll over its $500,000 loan. The businessman told Bush he had to roll over that loan six or seven times a year to keep his company functioning. "That's how badly we need that credit," he told the president.

Moments later, when asked whether the $700 billion Wall Street bailout will work, the best Bush could tell them was, "It's the best shot we've got."

It was hardly a thundering vote of confidence.

His years of sunny optimism seem to have turned dour. He spoke as if Americans would have to hunker down and wait out the economic storm, and he sounded as powerless against it as if it were a meteorological event.

"I wish I could snap my fingers and make what happened stop but that's not the way it works," he told his audience.

"The days are dim right now for a lot of folks, but I firmly believe tomorrow's going to be brighter," Bush said at another point.

While Bush can still joke, at times the joshing is replaced with a wan smile.

"He's winding down and he's battered down," said Stu Rothenberg of the Rothenberg Report, which chronicles Washington politics and government.

Torie Clarke, an ABC News consultant and former Bush administration aide, said the president lacked the political muscle to play a larger role in the crisis.

"If it happened earlier in his administration, maybe he could play a different role," she said. "But his standing is so low, his role in this was diminished."

Bush's role was diminished just a bit more today when he signed an executive order that officially begins the transition of his administration to either Sen. Barack Obama or Sen. John McCain, the two men battling to succeed him.

The executive order creates a transitional coordinating council consisting of ranking officials from key White House agencies, including intelligence, defense, homeland security, budget, justice and other departments. Those officials will start working with the Obama and McCain camps so that whoever is elected can begin preparing to take over the reins of government on Jan. 20.

As the economic crisis built, the president made several appeals for confidence and calm in the economy, including two last week before the markets opened as his administration struggled to win approval of the massive rescue plan.

The timing of those early morning appearances was meant to reassure Wall Street and the credit markets that his administration was coming to their rescue, despite a rebellion by fellow Republicans in the House.

It was a moment of political chicken. Failure, he publicly admitted, could trigger the country's worst economic crisis since the Depression.

Wall Street Meltdown Was Bush's Economic 9/11

"Not since the terror attacks of 9/11 had his tone been so serious, his demeanor so grave," according to ABC News' Martha Raddatz, who has covered the Bush administration for nearly eight years. "He was not just reading a speech that had been handed to him. He was pleading."

"He talked of the 'pivotal moment' for our nation's economy, the 'urgency' needed in getting legislation passed. In the previous few months, the lame-duck president had worked far from the spotlight, but that morning the world was once again watching. With a gaze that did not wander and a deep chill in his voice, Bush tried to make them listen," Raddatz said.

If they listened, they shrugged. Republicans in the House overwhelmingly rejected his bailout plan. It would be nearly another week and $100 billion more in "sweeteners" before Congress approved his legislative rescue package.

White House deputy press secretary Tony Fratto defended Bush's role in the economic crisis and the passage of the bailout package.

"It may be the single most important bill on the economy ever passed, and the president's leadership was largely responsible for that," Fratto said.

Bush will also convene the finance ministers of the major industrialized countries known as the G7 for a White House meeting this weekend.

Like many presidents in their last months, Bush has visibly aged and has a thinner schedule than his first seven years in office. He hasn't held a news conference since July 15 and his spokeswoman says it's partly because he doesn't want to get entangled in the presidential race.

He is no longer the undisputed leader of the GOP. Administration officials check in with John McCain's campaign nearly every morning to walk through schedules and talking points to ensure the party message matches.

Bush was conspicuously absent as the dominoes in the credit crisis started to tumble with the Fannie Mae and Freddie Mac takeover Sept. 7. Then Merrill Lynch was sold off Sept. 14. Lehman Brothers went bankrupt Sept. 15, and the federal government came up with a $85 billion rescue of American International Group Sept. 16. Markets became skittish, the ripples were growing ominously large and radiating around the globe.

But it wasn't until Sept. 18 and Sept. 19, that Bush addressed the growing crisis with brief statements at the White House before turning on his heels and departing without taking any questions.

"As the financial crisis was unfolding, he seemed really irrelevant," analyst Rothenberg said. "He was invisible, a force not to be reckoned with.

"You could almost say that the financial crisis was the economic version of 9/11," Rothenberg said. "When you think about 9/11 with George Bush, he was leading the country, he was rallying the country. With the economic crisis, it was [Treasury Secretary] Hank Paulson who was leading the charge, and that was odd. Usually the president is out there to engage the public."

Larry Sabato, director of the Center for Politics at the University of Virginia, called Bush "the lamest of lame ducks."

But he gave Bush some credit for eventually winning passage of the $700 billion rescue plan.

"Even for a popular president, it would be tough to move Congress on such a big-ticket item," he said.

Sabato said he would give Bush a grade of D "for letting this [problem] accumulate and explode, and a B for getting something done, along with others, when the need was obvious."

Clarke said she and others were also struck by the downbeat tone of Bush's comments in Virginia Tuesday, but credited them as a "pretty honest, straightforward answer by the president."

Bush Calls German Chancellor

His low profile during the crisis was likely dictated by his lame-duck status and low poll ratings.

What the president says has historically been able to affect the market, but the White House "recognizes his public value is probably limited. ... So I'm not surprised he's not out there every 20 minutes," Clarke said.

Privately, Bush has given "Paulson a lot of running room and a lot of free rein," which was a smart thing to do, Clarke said.

And the White House issued a statement Wednesday that Bush was working the phones with foreign leaders in an effort to contain the spreading crisis.

"President Bush called German Chancellor [Angela] Merkel this afternoon to discuss the various measures that the United States is taking to bring stability to the markets, as well as the importance for all countries to work together to coordinate our actions to address problems facing the global economy," White House spokeswoman Dana Perino said.

Clarke, who was a spokeswoman at the Pentagon in the Bush administration, said she would have done things differently if she were advising the White House.

"Public officials, especially in difficult times, should be very visible and very transparent about what they're doing," she said. "Sort of the 21st century version of Roosevelt's fireside chats."