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. Last Updated: 07/27/2016

Washington May Step In to Prevent Recession

WASHINGTON -- As Wall Street held its breath over Monday's resumption of stock trading, Washington signaled Sunday it will pull out all the economic stops to keep the country from being shoved into recession by last week's terrorist attacks.

In an unusual joint appearance, House of Representatives Speaker J. Dennis Hastert, Republican Illinois, and Minority Leader Richard Gephardt, Democrat Missouri, told "Fox News Sunday" they are assembling bipartisan proposals designed to revive growth, which was faltering even before Tuesday's attacks.

Among the proposals are new spending programs and tax cuts that might drive the government back into deficits but also could help keep consumers buying and the economy percolating.

"We're talking about things now that we're going to have to do to sustain our markets, to make sure there's confidence, both consumer confidence and confidence in our market system," Hastert said.

Leaders acknowledged Sunday that the economic fallout from the attacks is proving even more complex than initially anticipated. Vice President Dick Cheney said administration officials are scrambling to help the airline industry, which has been financially wounded by the shutdown of air traffic in the wake of the attacks and a sharp contraction of ridership.

Independent analysts said a bailout in the form of direct aid, low-interest loans and government assumption of some industry expenses may be in the offing.

"We're very interested in finding ways to make certain ... there's no sort of permanent damage to our civil aviation capacity," Cheney told NBC's "Meet the Press."

In a remark that captured policy-makers' peculiar bind -- trying to revive economic ebullience even as they say they are preparing for military action -- Cheney called on Americans to do their patriotic duty by continuing to shop.

"I would hope the American people would, in effect, stick their thumbs in the eye of the terrorists and say that they've got great confidence in the country, great confidence in our economy, and not let what's happened here in any way throw off their normal level of economic activity," he said.

The vice president's comment reflects growing worry among economists that the attacks and their somber aftermath will persuade consumers, who were already slowing their purchases, to pull back sharply -- a move that could drive the country into a substantial downturn.

A recent University of Michigan survey found consumer confidence, which influences how much people buy, slipping to an 8 1/2-year low in early September even before the assaults. But a new Los Angeles Times poll conducted in the wake of the attacks found Americans still upbeat.

Asked about the overall state of the economy, fully 71 percent of 1,561 respondents said they thought it is doing "very" or "fairly well." Asked what the effects on the economy would be of the global stock declines that followed the attacks, 73 percent said they would be only a "temporary setback."

Until now, the burden of trying to keep the economy afloat has fallen almost entirely on the Federal Reserve. But now the White House and Congress may take a stronger role.