Groundhog Hogwash

US in tense wait for House vote on bail-out plan

Anne Davies, Washington

REPUBLICAN and Democrat leaders have redoubled their efforts to find an extra 12 votes for the $US700 billion bail-out plan for Wall Street, when it returns to the House of Representatives for a possible vote tomorrow after it passed easily in the Senate.

In a show of bipartisanship, the two parties combined in the Senate yesterday to carry the bill 74 to 25.

Surprisingly, John McCain, who has struggled to find his voice on the economic crisis, did not give a speech to the Senate, after suspending his campaign and throwing himself into bail-out negotiations last week. His rival, Barack Obama, spoke for 13 minutes. He also crossed the floor of the Senate to offer his rival the briefest of handshakes.

Democrat senator Chris Dodd, the chairman of the Senate Banking Committee and a leading architect of the bill, said he understood people wanted to “stick a finger in the eye of the bankers and tycoons”.

But he said the crisis, if not tackled, would soon cause college loans, car loans, home mortgages and small business finance to dry up, bringing economic catastrophe to ordinary Americans.

But despite the strong vote and support from a majority in both parties in the Senate, no one is yet sure whether the bail-out package has the numbers to pass the House. On Monday the House voted to oppose the bill, 228 to 205, sending Wall Street into its biggest one-day plunge in history.

Senior figures said the vote would be scheduled tomorrow only if leaders were sure they had the numbers. Only two Republicans had indicated publicly a willingness to consider changing their vote.

“I think a good vote coming out of the Senate will certainly be helpful over in the House side,” Republican leader in the Senate, Mitch McConnell, said. But there were no predictions from House Republican leaders.

The two presidential candidates, Republican Senator McCain and Democrat Senator Obama, are working the phones to help swing House members. Both voted in favour of the bail-out. A number of Senator Obama’s early supporters, notably African-Americans from poor districts, voted against the package first time around.

The package had also been enhanced with sweeteners including an increase in the insurance limits on bank deposits from $100,000 to $250,000 and extending tax cuts for business and the renewable energy industry, which were due to expire.

The first is likely to be a strong selling point with House members trying to justify support to their electorate. It particularly helps community banks, which are more vulnerable to runs on their funds.

The business tax cuts add $110 billion to the deficit but are likely to be appealing to Republicans, who have backed them previously. The small-business lobby had been brought in to cajole reluctant members.

But there is a risk that, by adding the new tax cuts, conservative Democrats concerned about unfunded tax cuts — the Blue Dogs — might defect.

House leader Steny Hoyer, a leading Blue Dog, said he was disappointed in the Senate’s decision and worried it could cost Democratic votes.

“Certainly there are people who are upset we are making the deficit worse as we are trying to stabilise the economy,” Mr Hoyer told reporters. But he told colleagues he would back the measure because the economic rescue needed to take priority.

With the entire House facing re-election on November 4, except for a few retiring members, members are extremely sensitive to pressure from their constituents.

Lawmakers are still being bombarded with letters and emails opposing the bill, but community leaders and businesses from their districts have begun writing to them telling them of local consequences of the retreat of credit.

The Democrat leader in the Senate, Harry Reid, warned that there wasn’t a lot of time. “A major insurance company, a household name, is on the verge of going into bankruptcy,” he said.

October 3, 2008

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