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Senate Sends Rescue Bill To The House Senate Sends Rescue Bill To The House

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ECONOMY

Senate Sends Rescue Bill To The House

The Senate Wednesday night overwhelmingly passed a multibillion-dollar rescue fund for at-risk financial institutions, placing additional pressure on the House to clear the measure amid signs that opposition appears to be cracking in the lower chamber.

The 74-25 vote came as some House members who opposed the package Monday said they were reconsidering after the Senate bill was reworked to include sweeteners such as a tax-extender package, a patch for the alternative minimum tax, disaster aid and an increase in FDIC coverage amounts from $100,000 to $250,000 for one year, along with an unlimited credit line for the agency from the Treasury.

 

In addition, a lobbying campaign by business interests affected by the credit crunch -- small shops, auto dealers and restaurant franchisees -- began to temper populist outrage over what critics saw as a bailout for Wall Street executives who sparked the liquidity crisis.

Business groups such as the National Association of Manufacturers, National Association of Wholesaler-Distributors and Information Technology Industry Council wrote to lawmakers announcing they were making it a "key vote" in their annual scorecards. And nearly 700 companies and trade associations have written congressional leaders urging them to adopt the energy tax incentives in the Senate bill for wind, solar and other renewable sources, which could be important in gaining votes for candidates in both parties.

 

Such efforts appear to be swaying House Republicans. GOP sources on the House side predicted as many as 25 members of both parties who voted against the first plan could switch Friday. The House voted 228-205 to reject the package Monday.

House Majority Leader Hoyer Wednesday called it unfortunate that the Senate attached a tax extenders' package that is only partially offset, but he conceded it was more important to swiftly pass the recovery bill.

"We are making the deficit worse as we're trying to stabilize the economy by passing extenders which are not paid-for, so, yes, there are people concerned about that. I'm concerned about that," Hoyer said. "But again, I think we are focused on the recovery package, on stabilizing the economy, on reasserting confidence in the markets, so that the recession can be stemmed and so average working men and women aren't more disadvantaged than they already are."

Some in the Blue Dog Coalition who voted for the bailout plan Monday, such as Reps. Jim Cooper of Tennessee and Dennis Moore of Kansas, appeared to be supportive despite the lack of extender offsets.

 

"I have grave concerns about any legislation that passes off the costs to our children and grandchildren, adding to our $9.6 trillion debt. But in this difficult time, I'm glad the Senate is moving on this much-needed emergency economic rescue plan," said Moore, a Blue Dog co-chairman.

All told, the tax provisions would add $110.4 billion to the deficit over the next 10 years, according to the Joint Committee on Taxation, on top of the underlying cost of the rescue package.

Hoyer said he is discussing timing and, if possible, the measure might come up late today, but the current plan calls for a vote Friday in the late morning or early afternoon.

He said he has been talking with House Minority Whip Blunt "three, four, five times a day" about the situation.

"I know he is working this issue; I think many of his members are going to find the [tax extenders] and the FDIC provisions to their liking, so hopefully he'll be able to have some progress. But he'll need 100 Republican votes to pass this," Hoyer said.

House Democratic leaders have worked hard to keep from owning the bailout and insisted on a large level of GOP support that they failed to get on the first vote. Of 235 Democrats, 140 supported Monday's bill. Of 199 Republicans, 65 voted for it.

Underneath the public diplomacy there is an undercurrent of resentment at the Senate by Blue Dogs and others.

"It's pretty clear that Mr. Hoyer and the Blue Dogs were trying to do the responsible thing by paying for [the extenders] and taking it through regular order, and it's pretty clear the only way the Senate could get around doing the fiscally responsible thing was to play politics and use this urgent piece of legislation to force the hand of the House," said a senior House Democratic aide.

House Ways and Means Chairman Charles Rangel said in a statement that the move sets a dangerous precedent. "Apparently, in the Senate, they just decide what can get 60 votes and insist the House follow suit. There is something wrong with this, not just for this Congress, but for those to follow," Rangel said. "The Senate can't believe this is the way the Congress and the House will move forward in the future."

But despite such hard feelings, many sources said the bill is likely to pass.

A senior aide to one liberal House Democrat who did not back the earlier version of the bill said that despite rumblings from opponents, the Senate bill would win House approval.

"It's going through," said the aide. "They could have a provision that says it's OK to club baby seals, and they will find the votes for this. At this point it is only a question of how many votes by which this passes."

There were several signs Wednesday of movement on the Republican side. Rep. John Shadegg, R-Ariz., indicated he was leaning toward supporting it after voting "no" Monday. Shadegg cited the raising of the FDIC cap and a SEC decision to offer guidance on mark-to-market accounting rules that require companies to value assets at current prices, not their value when they mature. The issue is crucial in the real estate market, where many properties have been severely devalued but are expected to regain value.

Rep. Pat Tiberi, R-Ohio, who voted against the bill Monday, appears ready to vote for the Senate version. "He's very encouraged by what he sees in the bill. Those were the two main things that he has been talking about since Monday that he wanted to see in the bill," said a Tiberi spokeswoman.

Representatives from groups like AARP and the Business Roundtable and lobbyists said pressure is focused on members from Ohio, Georgia, California and Texas who voted "no," with particular pressure on some members from Florida.

Sunshine State lawmakers are being prodded to vote "yes" because of the large number of retirees who rely on retirement accounts that are losing value. Additionally, the tax package would allow residents of states, such as Florida and Texas, that do not have an income tax to continue to be able to deduct their sales tax on their federal returns.

Rep. Tom Feeney, R-Fla., who faces a tough re-election race, is reviewing the Senate bill and is undecided -- but is not considered a likely switch to a "yes." Fellow Florida Republican Rep. Ginny Brown-Waite, who also voted "no" Monday, is uncommitted.

While the FDIC insurance increase is seen as a positive for getting extra votes on both sides of the aisle in the House, GOP leadership aides said there is also a downside for fiscally conservative lawmakers. The insurance program is paid for from bank fees, which will likely be passed on to the consumer.

"It could be pegged against us as a tax increase, but that is less an immediate concern than getting this done," said one senior GOP leadership source.

In addition, some conservative groups were circulating lists of tax "earmarks" senators added to the bill, such as provisions benefiting film and television studios, wooden arrow-makers and litigants in the 1989 Exxon Valdez oil spill in Alaska.

They singled out "extenders" like tax breaks for railroad track maintenance, motorsports complexes, wool research and rum produced in Puerto Rico and the U.S. Virgin Islands.

On the House's Democratic side, there are several members who voted "no" Monday who indicated Wednesday they would re-evaluate their positions.

Rep. Bart Stupak, D-Mich., wants to look over the bill and hear people out in the Democrats' Caucus meeting today, an aide said.

Rep. Hilda Solis, D-Calif., is in the same boat as Stupak, but an aide indicated she could be swayed. Solis spokesman Roberto Soberanis said Solis does not agree with some of the energy incentives, specifically oil shale and credits for coal-to-liquid projects. "She's not a hard 'no;' she's not a hard 'yes,' " Soberanis said.

Grassroots pressure is building in Northern California where the Bay Area Council, a business-sponsored, public-policy advocacy organization for the nine-county region, has urged four area House Democrats to switch their votes to "yes" -- Reps. Barbara Lee, Fortney (Pete) Stark, Mike Thompson and Lynn Woolsey.

"We fully appreciate the principled position you have taken on this issue and we understand that this is a very difficult issue for members to vote on, but we ask that you consider the implications of doing nothing or letting this credit freeze continue for an extended period," the council said in a letter Tuesday. "Please support the economic rescue plan when it next comes up for a vote."

It's a mixed bag among Oregon Democrats, who have been at the forefront of pushing for rural county payments to be extended, as the Senate package would do.

Its funding is not enough to sway Rep. Peter DeFazio, D-Ore., who has led an effort for an alternative bailout plan that includes the Senate's increase of the FDIC insurance limit to $250,000.

Rep. David Wu, D-Ore., is a longtime advocate of the rural schools program as well and "that is one that is being talked about [that] is very important," his spokeswoman said. "But he's going to consider the whole package."

Rep. Earl Blumenauer, D-Ore., might change his mind. "That is something he is taking note of and is taking under special consideration," a spokeswoman said. The spokeswoman said it is unclear whether the rural schools funding or the renewable energy tax incentives are enough to sway Blumenauer, as he opposes the package's incentives for coal-based liquids, tar sands and oil shale.

Rep. Edward Markey, D-Mass., who supported Monday's bill, is trying to keep the coal and oil incentives out of the bill. His spokesman could not say whether that would be enough to make Markey oppose the Senate version. "Right now he's just focused on trying to make sure those elements aren't part of the package," he said. "That would make it, I think, for many people an easier vote."

Markey and Rep. Lloyd Doggett, D-Texas, a "no" vote on Monday, both circulated letters to House Speaker Pelosi Wednesday urging her to strip the "dirty fuels" provisions from the package. In addition, Doggett said, the lack of "pay-fors" in the Senate extender package only cemented his opposition. "The Senate has changed my position from 'no' to 'no way,'" Doggett said.

Rep. Neil Abercrombie, D-Hawaii, is fond of the energy incentives and added taxpayer protection in the Senate version and could be swayed, his spokesman said. "We're just beginning to understand it," the spokesman said. "It's certainly more positive than the House bill."

Pelosi might face a tough sell trying to get help from the Congressional Black Caucus. Only 18 of 39 CBC members voted "yes" on Monday. One Democratic strategist said the CBC vote count is not likely to change because the extender package is viewed by them as helping business interests, while provisions for homeowners -- such as a major change in bankruptcy law to allow judges to reduce the principal of a mortgage to market value -- were not included.

"The things that they care about still aren't being addressed," said the strategist.

The Bush administration endorsed the Senate legislation Wednesday. "The administration believes this legislation should be passed as quickly as possible to permit subsequent action by the House and to facilitate prompt signing into law," read a Statement of Administration Policy. "A strong bipartisan showing in support of the legislation will send an important, helpful signal to markets here and abroad that the federal government will take the actions necessary to get our financial system back on track."

This article appears in the October 4, 2008 edition of NJ Daily.

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