Bush asserts U.S. thriving on low taxes

Sidestepping the turmoil in the housing market and the credit problems associated with it, President Bush said Thursday that the nation’s economy was strong and would remain so if Congress steered clear of tax increases.

But he would not rate the risk of recession, saying, “You need to talk to economists. I think I got a B in Econ 101. I got an A, however, in keeping taxes low.”

During a 35-minute White House news conference, Bush also said he would veto legislation intended to help the families of poorer children pay for their healthcare unless its reach was scaled down. The veto threat sets up a battle with Congress; the current program expires on Sept. 30.

“Members of Congress are putting health coverage for poor children at risk so they can score political points in Washington,” Bush said.

Bush said the legislation would convert a program intended to help poor children into one covering children in households with yearly incomes of up to $83,000. That claim was challenged by Democrats and Republicans on Capitol Hill.

Supporters of the State Children’s Health Insurance Program legislation expect to pass a bipartisan compromise next week to expand the program by about $35 billion over five years, extending coverage to an additional 4 million children. The federal-state partnership currently insures about 6 million children, including more than 800,000 in California’s Healthy Families program.

Independent analysts say that Bush’s offer -- expanding the program by $5 billion over five years -- would not sustain the program’s current caseload.

The compromise closely tracks a bill approved this summer by a veto-proof margin in the Senate. It has drawn support from at least 18 House Republicans -- not enough to override the threatened veto -- as well as from a number of Republican governors.

The president’s remarks Thursday set off a storm of complaint not only from Democrats on Capitol Hill, but also from some Republicans.

Sen. Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee, said he had spoken during the morning with Bush and told him that the administration’s plan was insufficient “to accomplish what he said he wants to do, and that’s cover more kids.”

“Drawing lines in the sand at this stage isn’t constructive,” Grassley said of the president’s comments, adding in a written statement that Bush was mistaken in saying that the bill would help meet the healthcare coverage costs of children in households with incomes up to $83,000.

House Speaker Nancy Pelosi (D-San Francisco) took issue with Bush’s assertion that Democrats were maneuvering on the measure to achieve political advantage. “What we want is a bipartisan bill,” she said.

Bush’s news conference, called to draw attention to his disagreement with Congress over the health plan, drew sharp contrasts with Democrats on several issues.

The president offered his first public remarks on the involvement of the private security firm Blackwater USA in a shooting incident that reportedly killed 11 Iraqis in Baghdad last weekend. He said he was likely to speak about it next week with Iraqi Prime Minister Nouri Maliki when the two are in New York City for the annual meeting of the U.N. General Assembly.

Before expressing regrets over the incident, “let’s find out what the facts are first,” Bush said.

The president refused to discuss reports of an Israeli bombing raid on a Syrian target. The alleged attack has prompted speculation that Syria had begun trying to develop a nuclear weapon.

“I’m not going to comment on the matter,” Bush said sternly -- and repeatedly -- as he was pressed to say whether he supported the reported action and whether it raised new concerns about resolving tensions in the Middle East.

Asked how he responds to economists’ concerns that the nation is at increasing risk of recession, the president said: “The fundamentals of our nation’s economy are strong. Inflation is down. Job markets are steady and strong.”

He acknowledged, however, “some unsettling times in the housing market, and credits associated with the housing market.”

The president’s words on the economy appeared to carry little clout on Wall Street, where after a two-day rally the Dow Jones Industrial Average fell 48.86 points. The decline reflected worry over a weakened dollar and rising oil prices, factors that have stoked fears of inflation.

The president noted that interest rates were low -- without mentioning that the Federal Reserve dropped its key interest rate half a point Tuesday in response to nervousness in financial markets over sub-prime mortgages and the stubborn credit crisis.

He gave Federal Reserve Chairman Ben Bernanke a vote of confidence, saying he was doing “a fine job.”

Asked about the sharp criticism of administration economic policies in a new memoir by Bernanke’s widely respected predecessor, Bush offered a low-key reply: “I respectfully disagree with Alan Greenspan,” he said.

He also responded to another onetime administration official, Donald H. Rumsfeld, who was pushed out as Defense secretary in November and recently told a columnist he did not miss Bush. “I miss him,” the president said.

Regarding next week’s U.N. meeting in New York, Bush said he would leave it to the local police to determine whether Iran’s president, Mahmoud Ahmadinejad, should be allowed to visit ground zero.

“I could understand why they would not want somebody who is running a country who is a state sponsor of terror down there at the site,” Bush said.

He said “we’re going to take a good look” at whether there were national security implications to a plan announced Thursday under which the Dubai stock exchange, a government- controlled market at the center of Middle East business, would purchase a 20% share of the Nasdaq stock exchange.

Asked whether he would be an asset or liability for Republicans seeking election next year, he quickly responded “strong asset.”

He added that candidates who supported the military, promoted democracy in Iraq and promised not to raise taxes would “do well.”

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james.gerstenzang@latimes.com

Times staff writer Ricardo Alonso-Zaldivar contributed to this report.