Bush warns bailout failure will bring severe consequences to economy

President Bush warned Tuesday that failing to pass a financial rescue plan would bring severe consequences to the U.S. economy.

“Congress must act,” he declared in an appeal.

Republican John McCain and Democrat Barack Obama separately urged Congress to redouble efforts to get a deal through and both proposed increasing federal deposit insurance to $250,000, as a key part of it.

In brief remarks at the White House, Bush warned, “if our nation continues on this course, the economic damage will be painful and lasting.”

He said his administration would work with congressional leaders to get the defeated $700 billion relief package back on track. The House voted 228-205 Monday against the bill designed to stabilize a reeling financial system. That triggered the biggest one-day sell-off on Wall Street since the 2001 attacks, as the Dow Jones industrial plummeted by 778 points.

Bush noted that the maximum $700 billion in the proposed bailout was huge, but was dwarfed by the $1 trillion in lost wealth that resulted from Monday’s stock-market plunge.

“Because the government would be purchasing troubled assets and selling them once the market recovers,” he said, “it is likely that many of the assets would go up in value over time. Ultimately, we expect that much - if not all - of the tax dollars we invest will be paid back.”