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President Bush went before the nation last night to argue for his administration’s proposed $700 billion bailout of the financial system, which has been met with skepticism by some in Congress and the American public.

“Our entire economy is in danger,” Bush said, urging Congress to take quick action and outlining his rationale for the bailout.

Failing to pass a rescue plan, Bush said, would create the risk of a “long and painful recession” — meaning more foreclosures, lost jobs, declining home values, business failures, stock losses and difficulty getting loans.

“I’m a strong believer in free enterprise, so my natural instinct is to avoid government intervention,” Bush said. “I believe companies that make bad decisions should be allowed to go out of business. Under normal circumstances, I would have followed this course.

“But these are not normal circumstances,” he added. “The market is not functioning properly. There has been a widespread loss of confidence, and major sectors of America’s financial system are at risk of shutting down. The government’s top economic experts warn that without immediate action by Congress, America could slip into a financial panic and a distressing scenario would unfold.”

White House spokeswoman Dana Perino said the president decided to make the 12-minute address because he wanted to tell Americans directly about the severity and stakes of the financial emergency, which she described as a “once-in-a-century crisis in our financial markets.”

A bipartisan meeting was set for Thursday to begin drafting a compromise, which top Democrats said they hoped could pass within days.

Bush felt the public case had to be made that the financial crisis is about “Main Street, not Wall Street,” and the “costs of not acting are far greater than the costs of acting,” a senior White House official told ABC News’ George Stephanopoulos.

Bush spoke after Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke continued to press for the administration’s plan today before Congress.

“This entire proposal is about benefiting the American people,” Paulson said, “because today’s fragile financial system puts their economic well being at risk.”

Bush’s proposal - to allow the Treasury to buy troubled assets threatening the health of financial institutions - aims to restore confidence to the credit markets.

In the past week, short-term borrowing that businesses rely on to make payroll and cover other operating expenses has shown signs of freezing. Further problems in the credit markets could cause the U.S. economy to seize up - threatening Wall Street and Main Street alike with a loss of jobs and a severe economic downturn.

“We are in the midst of a serious financial crisis,” Bush said. “Our entire economy is in danger.”
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In recent days lawmakers, economists and administration officials have used the words “crisis,” “calamity” and “meltdown” to describe the possible ramifications if no action is taken.

“The market is not functioning properly,” Bush said. There is a widespread loss of confidence. America could slip into a financial panic.”

His proposal, first unveiled six days ago, would amount to the most sweeping economic intervention by the government since the Great Depression.
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Lawmakers from both sides of the aisle, while acknowledging the need to take action, objected to the Treasury’s proposal both for its size and for its lack of taxpayer protections. Paulson has contended the taxpayer risk is far greater by not doing something and letting the economy hit the skids.

The spare, three-page proposal sent by the Treasury to lawmakers requested the authority to buy up to $700 billion in troubled assets.

Democrats want to add provisions that provide oversight; curb executive pay at companies that sell assets to the Treasury; let the government have the option of taking an equity stake in companies that participate; and require the government to encourage foreclosure prevention for the troubled loans it purchases.