WASHINGTON (AP) - The Senate pushed toward passage Wednesday of a $700 billion financial industry bailout, and opposition to the package among House Republican conservatives appeared to be
softening as well, thanks partly to a provision to increase
insurance for people's deposits.
Congressional leaders from both parties said they were hopeful
that a new version of the rescue plan could be cleared late this
week despite its stunning House defeat on Monday that sparked a
historic stock sell-off. House Democratic leaders tentatively
planned a Friday vote.
One House Republican who joined two-thirds of GOP lawmakers
Monday in voting "no" indicated he was reconsidering. Others were
also said to be pondering a switch.
Rep. John Shadegg of Arizona, a leading conservative who voted
no on Monday, told a Phoenix radio station Wednesday that he'd be
"inclined to vote for the bill" if it raised the cap on federal
deposit insurance and changed a rule that forces companies to
devalue assets on their balance sheets to reflect the price they
can get on the market.
Rep. Steve LaTourette, R-Ohio, when asked if was ready to switch
from no to yes, said: "Not yet, but it's getting there."
The legislation essentially would allow the government to buy
bad mortgages and other devalued assets held by troubled financial
institutions. If successful, advocates of the plan say, that would
help lift a major weight off the already sputtering national
economy and benefit companies large and small as well as individual
The revised package to be voted on in the Senate also would add
$100 billion in tax breaks for businesses and the middle class
besides temporarily increasing the deposit insurance cap from the
current $100,000 to $250,000. Meanwhile, the Securities and
Exchange Commission has said it is easing the accounting rules in
In a statement Wednesday, Rep. John Boehner, R-Ohio, the
minority leader, called both "a victory for House Republicans,"
although some Democrats have backed the FDIC move.
Congressional leaders said the changes should improve the
package's chances - a message they hoped wouldn't get lost on a
convulsive Wall Street. Stock prices were basically flat by late
afternoon, as investors awaited news on the economic rescue
Some also saw heightened chances of passage based on a flood of
e-mails, calls and letters from constituents chiding Congress for
inaction on the financial crisis. The feedback indicated greater
public acceptance of the measure - if not a collective embrace - by
voters about five weeks before the elections.
House Minority Whip Roy Blunt, R-Mo., said calls and e-mails to
congressional offices that were running about 90 percent against
the measure earlier now are coming in about a "50-50" pace.
Democratic presidential nominee Barack Obama and his GOP rival,
John McCain, planned to fly to Washington for the Senate vote, as
did Democratic vice presidential nominee Joe Biden, and the White
House continued to lobby hard, both publicly and privately.
At the daily briefing Wednesday, White House spokesman Tony
Fratto took the unusual step of citing The New York Times, as well
as other newspapers across the country that carried stories on the
tightening credit squeeze on small businesses, municipal projects
and jobs. "It is affecting real Americans out there," he said.
Officials in both parties predicted the measure would pass the
Senate by a wide margin.
Behind the scenes, the president was conferring with Treasury
chief Henry Paulson and Federal Reserve Chairman Ben Bernanke to
get an update and to plot strategy.
Spokesman Fratto called the increased deposit insurance "an
important improvement" to the bill, and also welcomed the added
tax breaks, calling them "helpful" despite the White House's
initial desire for a clean bill.
Scrambling to revive a package that met with bitter derision
among constituents who viewed it as a giveaway to Wall Street, the
Senate added sweeteners designed to please rural lawmakers,
including disaster aid for hurricane-battered states and money for
rural schools. The package was hitching a ride on a popular measure
to require health plans for 51 or more employees to give equal
treatment to mental health or addiction if they cover such
House Democrats also asked senators to add a provision boosting
the tax break for homeowners who do not itemize their tax returns.
Another provision would extend the deductibility of state and local
taxes for people in states without income taxes, which includes
Florida and Texas.
House Democratic Leader Steny Hoyer of Maryland said, however,
he was concerned that the tax additions could complicate the
chances of final congressional passage when the legislation comes
back to the House floor for a vote.
There are worries that fiscally conservative House Democrats
known as "Blue Dogs" will be repulsed by the tax breaks because
they believe cuts should be bankrolled with spending cuts or other
The tax plan passed the Senate last week on a 93-2 vote. It
included relief from the alternative minimum tax, $8 billion in tax
relief for those hit by natural disasters in the Midwest, Texas and
Louisiana, and some $78 billion in renewable energy incentives and
extensions of expiring tax breaks. All told, it would cost about
$112 billion over five years.
Associated Press reporters Terence Hunt and Jennifer Loven
contributed to this story.
(Copyright 2008 by The Associated Press. All Rights Reserved.)