President-elect Barack Obama scrambled Wednesday to shore up congressional support to spend the second $350 billion under the Wall Street taxpayer bailout plan, amid mounting signs that Republicans who backed the original plan in October will overwhelmingly oppose it this time around.
Lawrence H. Summers, Mr. Obama’s chief economic adviser, and designated White House Chief of Staff Rahm Emanuel briefed Senate Republicans on the bailout plan, a day after Mr. Obama himself lobbied for support from his former Senate Democratic colleagues.
Majorities in both the House and Senate must vote to block the release of the money and then muster two-thirds majorities to override a promised Obama veto — a prospect even determined bailout critics say is remote.
“I’m not naive,” said Sen. James M. Inhofe, Oklahoma Republican. “In that respect, this is a fait accompli.”
But Mr. Obama and Democratic leaders in Congress are pressing to avoid a politically embarrassing veto clash in the first days of the new administration, even with political momentum on Capitol Hill running heavily against the bailout program.
Lawmakers of both parties have expressed anger at the Treasury Department’s handling of the Troubled Asset Relief Program (TARP), saying the program was poorly implemented, and failed to aid struggling homeowners or spur new bank lending. Treasury officials say they have nearly exhausted the first $350 billion under the program and need access to the rest of the bailout fund.
House Minority Leader John A. Boehner, Ohio Republican, and Senate Minority Leader Mitch McConnell, Kentucky Republican, worked hard to win Republican votes for the first bailout vote in October.
Mr. Boehner said Wednesday after a closed-door meeting of House Republicans he would vote to block the second round of $350 billion.
“Until I know how we spent it, why we spent it, where it is and how it’s going to be paid back, it would be irresponsible for me to vote for the next $350 billion,” Mr. Boehner said.
Mr. McConnell said he would find it “extremely difficult to support additional taxpayer funds without serious assurances from the incoming administration that the taxpayers will be protected.”
Some 34 Senate Republicans backed the bailout plan in October, along with 40 Democrats. Vote-counters say Republican support in the Senate for the second $350 billion may fall by two-thirds.
House Majority Leader Steny H. Hoyer, Maryland Democrat, said the House may take a vote after the Senate to block the funds, even if the Senate approved the payout. The House on Wednesday afternoon opened debate on a companion bill drafted by House Financial Services Committee Chairman Barney Frank, Massachusetts Democrat, designed to put strict conditions on how future TARP money is spent.
Among other things, the Frank bill would mandate that at least $40 billion of the fund be spent to help homeowners avoid foreclosure, while placing new strings on executive pay, dividend policy and acquisitions by banks and financial firms that accept taxpayer aid.
The U.S. Chamber of Commerce has supported the bailout plan, but warned that placing too many strings on the businesses who accept the money would be counterproductive.
“If you put into too many operating rules, it defeats the whole purpose” of the program, Chamber Chief Economist Martin A. Regalia told The Washington Times.