Bush: Lawmakers 'must listen,' vote yes
Posted October 2, 2008 12:17 p.m. EDT
Updated October 2, 2008 12:55 p.m. EDT
WASHINGTON — President Bush and congressional backers of a $700 billion financial industry bailout carried out high-intensity lobbying Thursday, on the eve of a crucial House vote that Bush said "a lot of people are watching."
Bush resumed his plea for passage from the White House as both Democratic and Republican party leaders worked the offices and halls of congressional office buildings. The goal: secure enough votes to send Bush a bill that he said presents the "best chance" to combat the widening credit crunch.
Speaking to reporters during a meeting with business executives, Bush said the increasingly tight credit markets are in some instances threatening the existence of small businesses. 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 a risk-taking Wall Street.
The much-maligned measure was 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.
The fierce lobbying came as the head of the Federal Deposit Insurance Corporation, 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 on C-SPAN. "What I don't want is to see otherwise healthy institutions start to get into trouble just because of liquidity pressure ... Wall Street should be taking their cue from Main Street right now. Main Street deposits are staying there."
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 with hurricane-like force.
Stocks declined on Wall Street early Thursday after the number of people seeking unemployment benefits rose last week to a seven-year high. The Dow Jones industrials fell by about 135 points, their fourth straight triple-digit move.
Bush said the issue is affecting employees and families across the country and that lawmakers "must listen" so confidence can be restored in markets and financial institutions.
The bailout package was never in danger in the Senate. Lawmakers there played catalysts for the House instead, adding tax provisions popular with the left and right in a bid that House leaders hope - but cannot guarantee - will persuade enough of the House rank-and-file to switch from "nay" to "aye" on a highly contentious bill a month before Election Day.
They were especially targeting the 133 House Republicans who voted against the package.
Rep. David Dreier, R-Calif., said Thursday he will vote for the bill, as he did Monday, despite some misgivings.
"I will tell you, the American people are angry and frustrated," he said on ABC's "Good Morning America," saying he's been hearing messages like "the woman who said she was concerned about getting access to a student loan for her daughter."
Rep. Marcy Kaptur, an Ohio Democrat, said on the same program that she plans to vote no.
"I will not support this legislation because it's the wrong medicine," she said. Kaptur argued that the problem should be solved by the market itself, not through governmental intervention.
After the Senate vote, Majority Leader Harry Reid, D-Nev., said, "We've sent a clear message to Americans all over that we will not let this economy fail. This is not a piece of legislation for lower Manhattan. This is legislation for all America."
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.
To some degree, at least, House GOP opposition appeared to be easing as the Senate added $100 billion in tax breaks for businesses and the middle class, plus a provision to raise, from $100,000 to $250,000, the cap 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.
There were worries, though, that the tax breaks might cause some conservative-leaning Democrats who voted for the rescue Monday to abandon it because the revised version would swell the federal deficit.
"I'm concerned about that," said Rep. Steny Hoyer of Maryland, the Democratic leader.
The Senate-backed package extends several tax breaks popular with businesses. It would keep the alternative minimum tax from hitting 20 million middle-income Americans. And it would provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.
Leaders in both parties, as well as private economic chiefs almost everywhere, said Congress must quickly approve some version of the bailout measure to start loans flowing and stave off a potential national economic disaster.
But critics on the right and left assailed the rescue plan, which has been panned by their constituents as a giveaway for Wall Street with little obvious benefit for ordinary Americans.
Sen. Jim DeMint, R-S.C., a leading conservative, said the step was "leading us into the pit of socialism."
But proponents argued that the financial sector's woes already were being felt by ordinary people in the form of unaffordable credit and underperforming retirement savings. Still, they said voters were unlikely to reward those who vote for the measure.
"There will be no balloons or bunting or parades" when the rescue becomes law, said Sen. Chris Dodd, D-Conn., the Senate Banking Committee chairman.
Tax cuts new and old are favorites for most House Republicans. Help for rural schools was aimed mainly at lawmakers in the West, while disaster aid was a top priority for lawmakers from across the Midwest and South.
Another addition, to extend the deductibility of state and local taxes for people in states without income taxes, helps Florida and Texas, 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.
The Senate vote lacked the drama of Monday's House vote, but it had its celebrity moments. Democratic presidential nominee Barack Obama and his GOP rival, John McCain, came off the campaign trail to vote for the package, thrilling tourists who glimpsed them in the Capitol's corridors and drawing hordes of reporters and photographers.
AP White House Correspondent Terence Hunt contributed to this story.