Turmoil grows

Jobless Claims 16-year High, Auto Bailout No Deal, Dow Down 445

struggling economy

Congressional Democrats had sought to move legislation that would direct $25 billion from the $700 billion financial rescue plan to the automakers to ensure they can stay in business until the spring. They abandoned those plans this week in the face of resistance from the White House and Senate Republicans.

The broader economic questions of what further actions Washington must take to avoid more home foreclosures and rectify staggered financial markets will probably have to wait until January, when the new Democratic-dominated Congress will convene and Barack Obama will be in the White House. An economy-stimulating package that could run into the hundreds of billions of dollars is likely to be on the agenda when the next Congress opens.

Treasury Secretary Henry M. Paulson Jr. said yesterday that the financial crisis now affecting the world economy is something that happens "once or twice" in 100 years.

The need to address the deteriorating job situation was one area where everyone could agree. "The recent financial and credit crisis has slowed the economy, and it's having an impact on job creation," White House press secretary Dana Perino said in urging Congress to pass the benefits extension.

Congress has enacted federally funded extensions seven times in the past 50 years during economic slumps - in 1958, 1961, 1972, 1975, 1982, 1991 and 2002.

Unemployment insurance is a joint program between states and the federal government that is almost completely funded by employer taxes, either state or federal.

The Associated Press and McClatchy-Tribune contributed to this article.