Sept. 23, 2008  -- The architects of the Bush administration's massive $700 billion bailout for financial firms went to Capitol Hill today to urge lawmakers to act quickly and pass the bill "cleanly" or risk a recession.

Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke told the Senate Banking Committee that failing to pass the administration's big-money bailout for the financial industry would stifle consumer spending, bring more home foreclosures and cause job loss.

However, Democratic and Republican lawmakers expressed outrage that the administration wants them to sign off on what amounts to the cost of two Iraq wars with less than a week of debate.

"What they have sent us is not acceptable," said Sen. Chris Dodd, D-Conn., chairman of the Senate Banking Committee after the hearing, which lasted almost five hours.

His counterpart, Sen. Richard Shelby of Alabama, the top Republican on the Senate Banking Committee said of the administration's proposed $700 billion bailout plan, "We have got to look at some alternatives."

Paulson told lawmakers Tuesday that his plan to buy up ill-liquid assets from banks and other financial firms "is the single most effective thing we can do to help homeowners, the American people, and stimulate our economy."

He urged Congress to "enact this bill quickly and cleanly, and avoid slowing it down with other provisions that are unrelated or don't have broad support."

He warned that Wall Street's economic situation is so perilous that "if that situation were to persist, it would threaten all parts of our economy."

The markets have gyrated wildly in recent days, first zooming higher and then pulling back Monday when traders became concerned that the bailout would be too expensive and possibly not solve the crisis. Wall Street steadied in early trading Tuesday.

Lawmakers Unhappy But Agreed on Need to Act

During the hearing, many lawmakers agreed that Congress needed to act quickly but argued they must provide the relevant oversight to make sure taxpayers are protected in case the administration's massive plan fails.

During the hearing, Dodd signaled that the lawmakers understood the need to move quickly on the legislation but expressed reservations with the administration's plan.

"We all recognize the gravity of the situation," said Dodd, who went on to blame a combination of "private greed and public regulatory neglect" for the country's economic crisis.

"I understand speed is important, but I'm far more interested in whether or not we get this right," he said. "There is no second act to this. There is no alternative idea out there with resources available if this does not work."

GOP Lawmakers Skeptical of Administration's Plan

Despite Paulson's plea for urgency, many lawmakers, including Republicans, expressed unease with the Bush administration's gigantic bailout plan.

"I have long opposed government bailouts for individuals and corporate America alike," Shelby said during the committee's hearing. "We have been given no credible assurances that this plan will work. We could very well send $700 billion, or a trillion, and not resolve the crisis."

"That amounts to $2,300 from every U.S. citizen," said Republican Sen. Mike Enzi of Wyoming. "That money will be handed out to the banks that put us into this mess to begin with."

"This massive bailout is not a solution. It is financial socialism and it's un-American," said Republican Sen. Jim Bunning of Kentucky.

"I am very skeptical of this proposal and extremely frustrated that we find ourselves in this position," said Republican Sen. Elizabeth Dole of North Carolina. She also said the failure of mortgage giants Fannie Mae and Freddie Mac, which required their own rescue plan earlier this month, was a major culprit for the economic meltdown.

"It is infuriating," Dole said of the situation.

'American Economy's Arteries' Clogged

The government's plan is to buy debts from financial institutions so they can be in a better position to raise capital and lend people loans.

"We asked for broad-based authorities to use a series of market-based approaches. We'll be dealing with different approaches in different situations," Paulson said.

Democratic Sen. Charles Schumer of New York, said Paulson told Congress "that our American economy's arteries, our financial system, is clogged and if we don't act the patient will surely suffer a heart attack -- maybe next week, maybe in six months, but it will happen."

A group of Democratic and Republican lawmakers are considering adding provisions to the legislation that would limit the use of taxpayer funds for multimillion dollar golden parachutes or bonuses for the executives of Wall Street firms who get rescued by the Treasury and enact authority to allow bankruptcy judges to reduce mortgage payments for borrowers facing foreclosure.

Paulson told the committee that when it comes to obscenely large CEO bonuses, "I share your frustration, I feel your frustration." But he argued that this issue should be dealt with separately from the emergency legislation.

Paulson testified alongside Federal Reserve Chairman Ben Bernanke and other officials, including Securities and Exchange Commission Chairman Chris Cox.

Bernanke also pressed Congress to act quickly.

"Global financial markets remain under extraordinary stress," Bernanke said. "Action by the Congress is required to stabilize the situation and avert what otherwise could be very serious consequences for our financial markets and our economy."

Bush Tells Nations Congress Will Act

President Bush, speaking at the United Nations General Assembly in New York before the markets opened, expressed confidence that Congress would agree on a bailout plan and left open the possibility of accepting amendments now being proposed by Democrats.

Bush characterized the administration's bailout plan as "bold" measures to deal with a severe problem.

He expressed optimism about the bailout legislation passing swiftly on Capitol Hill.

"I am confident we will act in the urgent timeline needed," Bush said.

Earlier the president had released a written statement saying that world leaders are questioning him about the economic turmoil "wondering whether or not the United States has the right plan to deal with this economic crisis."

"I've assured them that the plan laid out by Secretary Paulson is a robust plan to deal with a serious problem," Bush wrote, "and I've assured them as well, having spoken to the leaders of Congress from both political parties, there is the desire to get something done quickly."

Congress is hoping to have a vote on the legislation by Friday.

GOP Lawmakers: 'Grim Anger' Over Plan

House Republican sources told ABC News' Viviana Hurtado that a Tuesday morning briefing by top officials from the Treasury Department, the Federal Reserve, and the White House at the House Republican Conference left them with "grim anger and reluctant willingness to go forward."

GOP lawmakers were told that if they did not act soon, the impact to American families would be significant: there could be more job losses and savings could be put at risk.

Senior officials from the Treasury Department, the Federal Reserve and the National Economic Council warned that more erosion of confidence in the banking system would lead to further contraction of the economy, and the impact to American families could be significant job losses and savings put at risk.

"We are angry that the SEC, the Fed and Treasury did not warn us earlier. Still, we are extremely aware of the danger of not supporting the $700 billion bailout package, and in huge numbers, we will back the plan," said one House Republican member who attended the meeting.

But with this economic meltdown described by the NEC official as a problem a "long time in the making," some GOP lawmakers resent the pressure to fast track the White House backed rescue package.

"I get that the risk to the economy and families of doing nothing far outweighs backing the plan. But the plan has no guarantees, except trust in Bernanke and Paulson," a Republican lawmaker told ABC News.

Republican leaders pledged to work toward a bailout after a private lunch Tuesday with Paulson and Vice President Dick Cheney.

"I think many of my members feel that the issue of executive compensation ought to be addressed in the package. But we're anxious to act, and to act quickly, to restore confidence in the markets and in our country," said Republican Sen. Mitch McConnell of Kentucky.

"What's important to remember here is that if we don't take this type of stabilizing action the cost to the taxpayer in lost jobs, lost savings, lost opportunity, is huge," said Republican Sen. Judd Gregg of New Hampshire.

Republican Sen. Jon Kyl of Arizona, the minority whip, said that GOP senators do not like the concept of a government bailout for the financial markets, but "most, however, are convinced that there is a crisis in America, and that we cannot shirk our responsibility, and must act."

McCain May Hold Key to Bailout Passage

Democratic presidential candidate Barack Obama outlined Tuesday specifically what he wants to be included in Paulson's plan at a news conference in Clearwater, Fla.

Obama argued the administration's plan must include protections to ensure that taxpayer dollars are not used to further reward the bad behavior of irresponsible CEOs on Wall Street, and he called for the setup of an independent board to provide oversight and accountability over the money.

Obama also said if the government makes a profit on this deal -- which is highly unlikely -- then every penny must be given back to taxpayers, and he said the final plan must provide help to families who are struggling to stay in their homes.

"If the plan that emerges does not address the principles that I discussed then I will strongly recommend to Secretary Paulson that he go back to the drawing board and find an approach that does address them," Obama said.

It was unclear whether Obama would support the current proposal if it doesn't include his provisions, and he said, he would only go back to Congress to vote if the vote is close.

"If we get a consensus and everybody is popping champagne -- then I will probably be going back to campaign with folks who are having a tough time in places like Ohio, and Michigan and Pennsylvania," Obama said Tuesday. "If this ends up being a close vote or a vote where the outcome is an open question then obviously this is a top priority."

Republican presidential candidate John McCain may hold the key to the passage of the administration's unpopular $700 billion bailout in Congress.

If McCain doesn't vote for the administration's plan, some Republican and Democratic congressional leaders told ABC News the plan won't pass.

"If McCain doesn't come out for this, it's over," a top House Republican told ABC News' George Stephanopoulos.

A Democratic leadership source said that White House Chief of Staff Josh Bolten has been told that Democratic votes will not be there if McCain votes no -- that there is no deal if McCain doesn't go along.

McCain has expressed concerns about Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke's plan, which would amount to costing the American taxpayer the price of two Iraq wars.

The Republican presidential candidate has suggested the original proposal lacks sufficient oversight, and he has said whatever plan emerges should protect family savings, homes and student loans, and should eliminate obscene CEO compensation packages.

McCain said this week that any company that receives government aid should not be compensated more than $400,000 -- the highest-paid government employee.

McCain spokesman Tucker Bounds told ABC News' Jake Tapper that McCain has not made a decision one way or another.

"John McCain has been very clear that he has certain reservations about the details of the agreement that has been released at last notice," Bounds said. "There is no final agreement to review, but when there is John McCain will weigh in responsibly and appropriately."

Administration officials went to Capitol Hill Tuesday to urge Congress to pass the bailout package quickly, arguing the nation's economy is teetering on the brink of a major recession.

Some senior Democrats on Capitol Hill have voiced concern that McCain would continue to oppose the Bush administration's plan as a way to position himself as a critic of Wall Street and the Bush administration.

If McCain doesn't vote for the legislation, other Republicans might follow suit, leaving the Democratic-led majority to fight in Congress to pass the risky bailout plan.

However a Democratic congressional leadership source told ABC News' Jake Tapper that Paulson went so far as to assure Democratic leaders that McCain "won't be a problem" -- in other words that McCain will vote for the proposal.

ABC News' George Stephanopoulos, Jake Tapper, Z. Byron Wolf, Sunlen Miller, Viviana Hurtado and Ann Compton contributed reporting to this story.