Bailout bill passes Senate

Despite sweetening, measure faces stiff fight in House

October 02, 2008|By Maura Reynolds, Richard Simon and Nicole Gaouette | Maura Reynolds, Richard Simon and Nicole Gaouette,Los Angeles Times

WASHINGTON - The Senate voted reluctantly but solidly in favor of a modified $700 billion Wall Street rescue plan last night, but it remained uncertain whether the legislation - even with a carefully designed package of tax breaks - would withstand the fierce crosswinds of liberal and conservative resistance in the House later this week.

The measure passed the Senate 74-25, with a majority of Democrats and Republicans voting in favor - among them presidential nominees Barack Obama and John McCain. The centerpiece of the legislation gives the government the authority to buy up billions of dollars of the toxic assets, primarily mortgage-backed securities, that have poisoned financial markets and threaten to contaminate the rest of the economy.

"This rescue package ... is not for the titans of Wall Street. It's not for those whose greed got us here, who chose greed over prudence," said Senate Majority Leader Harry Reid, a Nevada Democrat. "It's for families across Nevada and across America who are fighting to keep their jobs, save their homes and make one paycheck last until another one."

The Senate action came two days after House members, facing re-election in a few weeks and confronted by angry constituents, rejected an earlier version of the plan and sent the stock market into a tailspin. The House will take up the new bill tomorrow morning.

House Minority Leader John Boehner, an Ohio Republican, said the package has a "much better chance" of passing the House than the measure that was defeated Monday 228-205. But he said he was "not taking anything for granted."

"I do think that the big [stock market] drop on Monday really had a chilling effect on a lot of our members and a lot of their constituents," Boehner said on Fox News.

The market reaction, compounded by opinion polls suggesting the public is more confused by the plan than opposed to it, led the Senate to add provisions in the hopes of attracting enough votes to pass both chambers this week.

Some additions were meant to appeal to a broad range of Americans, such as an increase in the limit for federally insured bank deposits to $250,000 from the current $100,000 and the move to shield 20 million Americans from paying the alternative minimum tax. Others were aimed at narrower interests to win the votes of specific lawmakers, such as a tax break to encourage Hollywood studios to do more filming in the United States.

The tax provisions added more than $100 billion to the cost of the bill. From a three-page proposal by the Treasury Department 10 days ago, the bill has swelled to 451 pages of legislation.

Rep. Steny H. Hoyer of Maryland, the second-ranking Democrat in the House, said he expected many GOP lawmakers would find the tax and FDIC provisions appealing. "Clearly we have said all along that passing this bill sooner is better than passing this bill later," Hoyer said.

The presence of both presidential candidates added pressure on senators to go along with the man from their party who might occupy the White House in a matter of months.

"To Democrats and Republicans who've opposed this plan, I say, step up to the plate. Let's do what's right for the country," Obama said in a speech on the Senate floor.

McCain walked into the Senate chamber nine minutes after Obama had arrived and swept by the Democrat. A few minutes later, Obama crossed to the other side of the floor, and the two shook hands and exchanged a brief greeting. McCain did not address the chamber.

Obama's running mate, Sen. Joe Biden, a Delaware Democrat, voted "aye." Treasury Secretary Henry M. Paulson Jr. and President Bush lauded the Senate's action and urged the House to follow suit.

Rep. Steve King, an Iowa Republican, said the new version of the bill contains a biodiesel tax credit he has championed, but he still plans to vote against the measure again. However, other lawmakers may be swayed, he said. "I think that they probably put enough sweeteners in it that they will be able to get the votes," he said in an interview.

Rep. Lloyd Doggett, a Texas Democrat, was similarly unconvinced. "The Senate measure has changed my position from 'No' to 'Heck, no,' " he said. "With the Senate amendment, the bailout has gone from bad to worse, $105 billion more in public debt worse."

Some of the changes appeared aimed at enticing specific lawmakers to change their votes to "yes."

For instance, the bill now includes a provision to boost insurance coverage of mental illness, a priority of Rep. Jim Ramstad, a Minnesota Republican, who voted against the bailout bill Monday. It also includes a tax benefit for bicycle commuting sought by Rep. Earl Blumenauer, an Oregon Democrat, also a "no" vote on Monday. And there's an extension of the solar tax credit, a priority of Rep. Gabrielle Giffords, an Arizona Democrat, who has said that she wants to make her state the "Silicon Valley of solar energy."

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