Lawmakers are engaged in a $700 billion game of chicken this week over the Bush administration’s push to pass an economic bailout proposal for Wall Street.
Key Democrats in Congress, backed by party presidential nominee Sen. Barack Obama on the campaign trail, made it clear Sunday that their support for the rescue blueprint offered by Treasury Secretary Henry M. Paulson Jr. comes with a price.
House Speaker Nancy Pelosi, California Democrat, vowed late Sunday to push for an independent oversight board for the Treasury bailout effort, as well as protections for homeowners facing foreclosure and new restrictions on lucrative Wall Street executive salaries, both of which Mr. Paulson has opposed.
“We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome,” Mrs. Pelosi said.
Other Democrats were concerned that loading up the rescue package with too many add-ons could torpedo the bill and leave them responsible for its failure.
Democrats “will not ‘Christmas-tree’ this bill,” Sen. Charles E. Schumer, New York Democrat and a key player in the backroom negotiations, said on “Fox News Sunday.”
Republican congressional leaders largely have lined up behind Mr. Paulson’s request that Congress pass a “clean bill” with few amendments, but they face a rebellion in their own ranks from conservatives unhappy with the idea of a massive federal intervention in the markets.
Mr. Obama of Illinois and top congressional Democrats say they support the bailout plan, given the fallout to the national and global economy from the current credit and asset crisis.
But Senate banking committee Chairman Christopher J. Dodd of Connecticut and House Financial Services Committee Chairman Barney Frank of Massachusetts both predicted that the three-page administration bill would be changed before final passage.
“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 echoed Mrs. Pelosi, saying he would be looking to add provisions limiting compensation for executives in failed banks and other financial firms that receive taxpayer aid. Democrats say they will redouble efforts to pass a $100 billion economic stimulus bill targeting Main Street.
“I don’t think that dirties up the bill,” Mr. Frank said.
Republicans face divisions of their own, with some Republican conservatives vowing to vote against the measure on principle.
House Minority Leader John A. Boehner, Ohio Republican, said a sobering closed-door briefing by Mr. Paulson and Federal Reserve Chairman Ben S. Bernanke on Thursday evening persuaded him to support the administration plan without amendments, despite his reservations.
“This is not a time for ideological purity,” Mr. Boehner said on “Fox News Sunday.” “This is not a time to be playing games.
Sen. Richard C. Shelby of Alabama, the ranking Republican on the Senate Committee on Banking, Housing and Urban Affairs, said he was open to at least some changes in the Paulson plan, while warning that the ultimate price tag to taxpayers could far exceed the current estimates of $700 billion.
Sen. Jon Kyl, Arizona Republican, said Congress could look at such issues as multimillion-dollar executive pay packages and homeowner relief after its 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,” he said on “Fox News Sunday.”
Democrats also are feeling pressure from liberal economists and think tanks that argue the Paulson plan gives the administration far too much power and is tilted heavily toward helping Wall Street while doing little for Main Street.
Brookings Institution economics fellow Doug Elmendorf floated a plan in which the government would make an industrywide equity investment in all types of financial firms. He argues that it would provide an instant jolt of money to get banks lending again, would not reward lenders who made the riskiest loans and, unlike the Treasury proposal, would give taxpayers a cut of the profits if the banks’ stock value improves.
Robert B. Reich, labor secretary under President Clinton and now a professor at the University of California at Berkeley, said any federal bailout funds should come with strings, including sharp restrictions on executive compensation and a ban on most lobbying and campaign donations from industries related to Wall Street.
“Wall Streeters may not like these conditions,” Mr. Reich said on his Web site (https://robertreich.blogspot.com). “Well, you should tell them that the public doesn’t like the idea of bailing out Wall Street.”
But both parties in the next few days will be trying to gauge how hard they can push before compromising, with both sides, for now, seconding Mr. Paulson’s argument that failing to act - and act soon - would be disastrous.
“Nobody knows exactly what they should do, but anything is better than nothing,” New York Mayor Michael R. Bloomberg said on NBC’s “Meet the Press.”