Sept. 24 (Bloomberg) -- President George W. Bush warned that the nation faces the prospect of a ``long and painful recession'' unless Congress acts quickly to pass a sweeping plan to stabilize U.S. financial markets.

``We're in the midst of a serious financial crisis,'' Bush said in a prime-time address tonight from the White House. ``Our entire economy is in danger.''

In the face of skepticism from Congress, the president laid out a dire scenario of lost retirement savings, job losses and collapsing businesses without the government intervening to buy up troubled assets. He suggested he would accept some of the changes being demanded by both Republicans and Democrats.

Bush addressed the nation after having invited presidential candidates John McCain and Barack Obama and a bipartisan group of House and Senate leaders to the White House tomorrow to hasten an agreement on the rescue package.

The invitation came after Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson faced another day of questioning on the plan from lawmakers, who said they would resist any legislation that amounted to a bailout for Wall Street at the expense of taxpayers.

Along with the urgency to act before credit markets freeze up, the administration and Congress are running up against the political calendar. With national elections six weeks away, lawmakers are trying to end their session so they can go home to campaign. They may work through the weekend, though snags and political wrangling may spill over into next week.

Building Crisis

Bush sought to explain the origin of the crisis.

``The problems we're witnessing today developed over a long period of time,'' he said.

He recounted how the influx of capital from overseas and low interest rates caused a boom in the economy as Americans bought up cars and homes and started businesses.

``Unfortunately, there were also some serious negative consequences, particularly in the housing market,'' Bush said. ``Easy credit, combined with the faulty assumption that home values would continue to rise, led to excesses and bad decisions.''

The decline in the housing market ``set off a domino effect'' throughout the economy, he said. ``The gears in the financial system began grinding to a halt.''

``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,'' Bush said.

Congressional Resistance

The $700 billion rescue plan Paulson presented to Congress ran into resistance quickly. In an effort to push toward a resolution this week, the administration has retreated on its opposition to limits on executive compensation for companies taking part in the rescue plan and for more oversight of its implementation.

Both McCain, an Arizona senator who is the Republican presidential nominee, and Obama, a senator from Illinois and the Democratic candidate, have expressed reservations about the administration plan. They issued a joint statement tonight calling on Republicans and Democrats to work toward a solution.

No Room for Failure

``The plan that has been submitted to Congress by the Bush administration is flawed, but the effort to protect the American economy must not fail,'' the statement said.

Obama spokesman Bill Burton said after Bush's speech that the senator was ``heartened'' by the president's support for limits on CEO pay as well as independent oversight and ``taxpayer protection.''

Their statement was released after McCain made a surprise announcement that he was suspending his presidential campaign and putting off a debate with Obama scheduled for Friday night to help hammer out a bipartisan agreement on a rescue plan.

Obama said he would continue his campaign after the White House meeting tomorrow afternoon and said he wanted to go ahead with the debate.

In his address, Bush sought to lay out the consequences for the public and to put more pressure on Congress.

``Turning around public opinion, which is running strongly against the deal, is important to turning around reluctant members of Congress,'' said Pete Davis, president of Davis Capital Investment, an independent advisory firm in Washington.

Public Skepticism

A Bloomberg/Los Angeles Times poll found that by a margin of 55 percent to 31 percent, Americans say it's not the government's responsibility to bail out private companies with taxpayer dollars, even if their collapse could damage the economy.

Paulson and Bernanke in two days of hearings in Congress sought to stress the impact on the economy outside of Wall Street should the plan fail.

``Credit is the lifeblood of the economy,'' Bernanke said today. ``If the credit system isn't working, then firms can't finance themselves, people cannot borrow to buy a car, to send a student to college, to buy a house.''

House Financial Services Committee Chairman Barney Frank said differences were ``narrowing'' in negotiations. He told reporters that Congress and the Treasury had agreed to allow the government to take equity states in companies it helps.

A joint House-Senate bill may be ready as early as tomorrow, Frank said.

Virginia Republican Representative Tom Davis, who supports the administration's program, said Paulson ``had a tough audience'' because ``there is a huge credibility problem with this administration.''

To contact the reporters on this story: Roger Runningen in Washington, at rrunningen@bloomberg.net; Catherine Dodge in Washington, at Cdodge1@bloomberg.net

Last Updated: September 24, 2008 23:15 EDT