Bailout gaining House support
WASHINGTON ” President Bush and congressional leaders lobbied furiously Thursday for enough House support to push the troubled $700 billion financial industry bailout bill to the finish line, and the measure won converts from both parties on the eve of a showdown vote.
Bush said “a lot of people are watching” and he kept up his pleas from the White House as Democratic and Republican leaders worked over reluctant colleagues wherever they could find them. Bush argued that the measure represents the best chance to calm unnerved financial markets and ease a worsening credit crunch.
Rep. Steny Hoyer, the second-ranking House Democrat, said there was a “good prospect” of approval but he wouldn’t put the measure up for the vote planned for Friday unless he was confident it would pass.
The chief Republican vote-counter, Rep. Roy Blunt of Missouri, said, “I think we will be able to go to the floor and be successful sometime tomorrow.”
GOP Rep. Zach Wamp of Tennessee announced he was switching his vote from “no” to “yes.”
“If some of us don’t change our vote, tomorrow’s going to be a real ugly day in America, and I don’t want to be a part of that,” Wamp told Fox News Channel. He was one of the 133 House Republicans and 95 Democrats who dealt the measure a stunning defeat Monday, sending the stock market tumbling.
Democratic Rep. Emanuel Cleaver of Missouri, another opponent on Monday, also planned to change his vote to a “yes” the second time around. “America feels differently today than it did on Friday about this bill, and he believes the House vote tomorrow will reflect that shift,” said Danny Rotert, his spokesman.
Speaking to reporters during a meeting with business executives, Bush said the increasingly tight credit markets are not just hitting big banks in New York City, but in some instances threatening the existence of small businesses across the country. He said Congress must listen to those arguing for passage of the bill, derided by many on Capitol Hill and within the general public as a handout to greedy Wall Street risk-takers.
The rescue package would let the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions. If successful, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.
The much-maligned measure returned to the House after the Senate resuscitated it with tax cuts and other sweeteners in a 74-25 vote late Wednesday. The bill had been defeated in House narrowly on Monday.
Hoyer, D-Md., left open the possibility the House could make further changes to attract more supporters, but he said that was unlikely. What won’t happen, he said, is a repeat of the kind of crushing scene that played out earlier this week when the bill failed.
“I’m going to be pretty confident that we have sufficient votes to pass this before we put it on the floor,” Hoyer said.
The Senate’s addition of some $110 billion in tax breaks and other sweeteners helped lure some Republicans but angered conservative “Blue Dog” Democrats concerned about swelling the deficit. Still, Hoyer predicted the number of Democratic defectors from the measure “is going to be minimal.”
In efforts to appease GOP opponents, the Senate-passed bill contains a provision to raise, from $100,000 to $250,000, the limit on federal deposit insurance.
House Republicans also welcomed a decision Tuesday by the Securities and Exchange Commission to ease rules that force companies to devalue assets on their balance sheets to reflect the price they can get on the market.
The developments Wednesday prompted one of those former foes, Rep. John Shadegg of Arizona, to say he was likely to support the new bill, and another, Steve LaTourette of Ohio, to say he was “getting there.”
Rep. Earl Blumenauer, D-Ore., a liberal opponent, is also reconsidering his vote, but is “not on board yet,” Lucia Graves, his spokeswoman, said on Thursday. Blumenauer wants to see a mechanism to pay for the bailout and more help for homeowners staring at foreclosure.
Republican Rep. Jim Gerlach of Pennsylvania is also reevaluating his “no” vote. In a statement, he said he plans to look at the Senate-passed version and see if there are “significant and sufficient improvements.”
Rep. Peter DeFazio, D-Ore., said he still opposed the bill, despite Senate inclusion of a program that pays rural counties hurt by federal logging cutbacks. DeFazio is a leading advocate of the timber program but said it was not enough to persuade him to vote for a bill that he called fundamentally flawed.
The fierce lobbying came as the head of the Federal Deposit Insurance Corp. urged people to remain calm.
“I think overall the banking system remains very sound so that’s why I think it’s so important for everybody to keep their head,” commission Chairman Sheila Bair said.
But the drumbeat of bad news rattled on. A government report said that orders to U.S. factories plunged by the largest amount in nearly two years as the credit strains smashed manufacturers.
The Senate in effect played legislative enabler for the House, adding tax provisions popular with the left and right in a bid that House leaders hoped would persuade enough of the rank-and-file to switch their votes to yes.
The modified Senate bill would extend several tax breaks popular with businesses, which are favorites for most Republicans. It would keep the alternative minimum tax from hitting 20 million middle-income Americans, which appeals to lawmakers in both parties. And it would provide $8 billion in tax relief for people hit by natural disasters in the Midwest, Texas and Louisiana.
Help for rural schools was aimed mainly at lawmakers in the West.
Another addition, to extend the deductibility of state and local taxes for people in states without income taxes, helps Florida and Texas, among others.
And House Democratic leaders circulated data Thursday showing precisely which states benefit most from an extension of a tax break for homeowners who do not itemize their tax returns. Texas, Florida, California and Pennsylvania ranked among the highest. Leaders hope the measure will bring support from black lawmakers, many of whom voted “no” earlier this week, among others.
Increasing the deposit insurance cap was a bid to reassure individuals and small businesses that their money would be safe in the event their banks collapsed. It was particularly geared toward small banks that fear customers will pull their money and park it in larger institutions seen as less likely to fold.
Associated Press reporters Terence Hunt, Ben Feller, Matthew Daly, Sam Hananel, Kimberly Hefling and Alan Fram contributed to this story.
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