Democratic presidential nominee Sen. Barack Obama and top Democratic lawmakers said Sunday their support will come at a price as Treasury Secretary Henry Paulson pressed for quick congressional approval of a $700 billion rescue package to deal with the nation’s financial crisis.
Campaigning in Charlotte, N.C., on Sunday, Mr. Obama called the Bush administration’s bailout program a “concept with a staggering price tag, not a plan,” while conceding the government had little choice but to intervene to prevent a larger crisis.
Mr. Obama said any bailout — including the government assumption of hundreds of billions of dollars’ worth of bad mortgage loans — must include a clear plan on how to recover the taxpayer investment and protect working families along with giant financial firms.
“There must be no blank check when American taxpayers are on the hook for this much money,” he said.
Republican presidential nominee Sen. John McCain addressed a convention of the National Guard in Baltimore on Sunday, largely talking about the war in Iraq and mentioning the financial crisis only briefly.
He said he had proposed a “plan for comprehensive reform of the broken institutions that allowed this crisis to become a grave threat to our economy. At the center of the plan is the principle that we must keep people in their homes and safeguard the life savings of all Americans by protecting our financial system and capital markets.”
In Washington, both Senate Banking Committee Chairman Sen. Christopher Dodd, Connecticut Democrat, and House Financial Services Chairman Rep. Barney Frank, Massachusetts Democrat, said they backed the Bush administration’s call for quick passage of the bailout program, but said Mr. Paulson’s blueprint would not emerge from Congress this week unchanged.
“Secretary Paulson and I have a lot of agreement, but we have a difference of opinion on what’s clean,” Mr. Frank said on CBS’ “Face the Nation.”
Mr. Frank said he would be looking to add provisions to limit compensation for executives in failed banks and other financial firms being bailed out. And Democrats say they will redouble efforts to pass a $100 billion economic stimulus bill targeting Main Street even as Wall Street’s woes are addressed.
“I don’t think that dirties up the bill,” Mr. Frank said.
More controversially, Democrats are considering whether to make it harder to foreclose on troubled mortgages that the federal government is proposing to take over.
Mr. Paulson, who made the rounds of the network talk shows, said on “Fox News Sunday” that “there should be a mortgage relief component to this [package],” but declined to endorse directly Democratic proposals on curtailing foreclosures. Just stopping the hemorrhaging on Wall Street and freeing up frozen bank credit lines will provide relief to Main Street, he insisted.
“This program, in and of itself, is designed to minimize the cost to the American public and to the taxpayer,” he said. “There is much greater risk in not doing this than in doing it.”
With Congress under severe pressure to deliver a finished bill in the coming week, Republicans on Capitol Hill are divided over their bailout program strategy. Many conservative Republicans already have rejected the plan on principle as a massive taxpayer-financed intrusion in the free market.
Rep. John Boehner, Ohio Republican and House minority leader, said a sobering briefing by Mr. Paulson and Federal Reserve Chairman Ben Bernanke late last week to congressional leaders convinced him to support the administration proposal without amendments, despite his reservations.
“This is not a time for ideological purity,” Mr. Boehner said, adding, “This is not a time to be playing games.”
But Alabama Sen. Richard Shelby, ranking Republican on the Senate Banking Committee, said he was prepared to accept at least some changes to the Paulson plan.
Conservative Sen. Jon Kyl, Arizona Republican, said Congress could look at issues such as multimillion-dollar executive pay packages and mortgage relief after it passes the plan to address the immediate crisis.
“Let’s put out the fire, and then we can go deal with our favorite solutions to all of these problems,” Mr. Kyl said on “Fox News Sunday.”
But while vowing to include their own priorities in the legislation, Democrats face a political risk if they are seen torpedoing a bailout plan that even their top leaders have conceded is vital.
As key lawmakers labored into the evening Sunday to fashion a bill, Sen. Charles Schumer, New York Democrat and a key player in the back-room negotiations, pledged, “We will not ‘Christmas-tree’ this bill.”