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Heavy horse-trading as House nears bailout vote
Question of the Day
UPDATED, 5:53 p.m.:
The fate of the $700 billion Wall Street rescue bill hung in the balance Thursday, as President Bush and congressional leaders tried to cobble together a majority in favor of the package ahead of a showdown vote in the House of Representatives Friday.
But with even top House leaders saying they could not predict how the vote will go, a critical bloc of more than a dozen lawmakers who voted against the bailout measure Monday said they were prepared to switch if the initial pay-out under the plan was sharply limited and last-minute pork projects added by the Senate Wednesday night were stripped from the bill.
“We have a critical mass,” said Rep. Steven C. LaTourette, a moderate Ohio Republican who voted against the bill Monday, saying he had talked to 14 other members willing to switch if the amendment he authored was accepted.
“Our core group is sufficient to take care of the margin to pass this bill, if our amendment is ruled in order and passed,” he said. He declined to identify the other lawmakers he said were prepared to switch.
House Democratic leaders were highly reluctant to agree to any changes to the Senate version bill, fearing it might slow down the legislative process even more amid global market uncertainty.
The stock markets tumbled again Thursday, with the Dow Jones index losing 348 points, or 3.2 percent, while the broader Standard & Poor’s index of 500 stocks was off 46 points, or just over 4 percent.
Adding pressure on lawmakers to act, a new government report issued Thursday found that new orders at U.S. factories tumbled by an unexpectedly steep 4 percent in August, the sharpest decline since October 2006.
House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer both said they were determined to avoid a repeat of the embarrassment Monday, while insisting that inaction was not an option.
“I will be pretty confident we have enough votes before I put [the bill] on the floor,” Mr. Hoyer said.
The White House and congressional leaders had hoped that the 74-25 Senate vote in favor of the bill would give it new momentum in the House. At least two Republican ‘no’ votes — Rep. Zach Wamp of Tennessee and Rep. John Shadegg of Arizona — announced they intended to vote for the bill.
“We fought for a better bill, but let’s not go into next week facing an economic catastrophe,” Mr. Wamp said in an interview on Bloomberg Television. “I think the wind is behind this bill now, instead of being in its face,” he said.
Even some of those still opposed to the bill said it appeared that the pressure from party leaders, the White House and the markets had taken its toll.
“I think probably the fix is in,” said Rep. Peter DeFazio, Oregon Democrat, in an interview on MSNBC. “Probably the bill passes now.”
A coalition of conservative Republicans and liberal Democrats defied their party leaders and stunned global financial markets by rejecting the original administration rescue package Monday on a 228-205 vote. The vote came despite warnings from Treasury Secretary Henry M. Paulson Jr. and private analysts that failure to act could cause global markets to seize up and create financial havoc on both Wall Street and Main Street.
Mr. Hoyer, Maryland Democrat, said he expected almost all of the 140 Democrats who supported the original deal to vote in favor again, despite unhappiness from some fiscally conservative Democratic Blue Dogs over tax breaks and other “sweeteners” added by the Senate. The real question, Mr. Hoyer said, will be whether enough Republicans can be persuaded to switch from ‘no’ to ‘yes.’
“We need a significantly greater number of Republicans than we got [Monday],” Mr. Hoyer said. “Frankly, the things that were added on in the Senate and the way they were added on essentially appeal to Republican members,” he said.
But the Senate changes have only added a new wrinkle to the high-stakes legislative standoff.
Mr. LaTourette’s amendment would give the Treasury Department the authority to spend only $250 billion initially, and seek congressional approval after that if more funds are needed.
In addition, it would strip spending items included in the Senate bill, including special provisions benefiting rum producers and the NASCAR stock-racing circuit.
Rep. Spencer Bachus, Alabama Republican and a highly reluctant backer of the bailout in Monday’s vote, endorsed the amendment and rejected the idea the House should rubber-stamp the Senate’s handiwork.
“It is a ludicrous suggestion to say that whatever the Senate passes we have to adopt,” said Mr. Bachus, who stopped short of saying he would switch to ‘no’ if the amendment did not pass.
Mr. LaTourette told reporters that his amendment would attract 400 votes on the House floor if the chamber’s Democratic leaders allowed it to be offered.
At the White House, President Bush hosted business leaders from the National Association of Manufacturers and the U.S. Chamber of Commerce, who have strongly recommended quick passage of the bailout measure. Mr. Bush, who has been making calls all week to lawmakers in support of the bill, said the economic crisis is starting to be felt far beyond the financial world.
“This thing has gone way beyond New York and Wall Street. This is an issue that’s affecting hardworking people,” Mr. Bush said. “They’re worried about their savings, they’re worried about their jobs, they’re worried about their houses, they’re worried about their small businesses.”
White House spokesman Tony Fratto the administration was “fairly optimistic that we have a good chance for a successful vote tomorrow.” Listening in on Mr. Bush’s lobbying, “I overheard some of the calls that went from no to yes,” Mr. Fratto added.
The U.S. Chamber of Commerce has spent thousands of dollars on advertising to convince the public that the rescue effort is necessary to stabilize the economy.
“We lost [Monday], no doubt about it; I have no intention of losing again,” said R. Bruce Josten, the chamber’s executive vice president for government affairs. “We pushing, we’re pressing and we’re playing hard.”
The core of the Wall Street rescue package, proposed by Mr. Paulson just two weeks ago remains intact: the Treasury Department would get up to $700 billion to buy up now-worthless mortgages and mortgage-related securities that are clogging the books of the nation’s banks and financial firms. Until those assets are dealt with, Mr. Paulson argues, banks will not lend, consumers and businesses will be unable to borrow, and the aftershocks will be felt in retirement pensions, savings plans, paychecks and payrolls across the country.
Lawmakers say they have improved the original three-page Paulson blueprint, adding several layers of oversight; some relief for homeowners struggling to meet mortgage payments; strict limits on executive pay who participate in the plan; and an ownership stake for the federal government in the companies being helped. If and when the U.S. housing market recovers and the mortgages gain in value, the government stands to recoup at least some of the money spent.
One Senate change that is likely to appeal to wavering House lawmakers in both parties would raise the ceiling on federal insurance of bank deposits from the current $100,000 to $250,000.
But conservative critics say the package remains a massive taxpayer-financed government intrusion in the private markets, and will likely not address the economy’s underlying weaknesses. Liberal opponents argue the bailout is tailored to Wall Street’s needs and does not do enough to help small businesses or homeowners.
House Financial Services Committee Chairman Barney Frank, a key negotiator in the bailout talks, discounted the idea that the Senate vote, with presidential rivals Republican Sen. John McCain and Democratic Sen. Barack Obama in support, would be decisive in the House re-vote.
“We generally don’t take each other as a role model,” Mr. Frank said in an interview on CNBC.
But he added the modified Senate bill could provide political cover for enough opponents to switch sides.
• Jon Ward and Sean Lengell contributed to this report.
About the Author
Raised in Northern Virginia, David R. Sands received an undergraduate degree from the University of Virginia and a master’s degree from the Fletcher School of Law and Diplomacy at Tufts University. He worked as a reporter for several Washington-area business publications before joining The Washington Times.
At The Times, Mr. Sands has covered numerous beats, including international trade, banking, politics ...
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