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Bailout Plan Clears Senate

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The New York Times

Published: October 2, 2008

WASHINGTON - The Senate strongly endorsed the $700 billion economic bailout plan Wednesday, leaving backers optimistic that the easy approval, coupled with an array of popular additions, would lead to House acceptance by Friday and end the legislative uncertainty that has rocked the markets.

In stark contrast to the House rejection of the plan on Monday, a bipartisan coalition of senators - including both presidential candidates - showed no hesitation in backing a proposal that had drawn public scorn, though the outpouring eased somewhat after a market plunge following the House defeat.

The Senate margin was 74-25 in favor of the White House initiative to buy troubled securities and to avoid a looming economic catastrophe.

Candidates' Presence Gave Weight

The presence in the Senate of both presidential candidates in the final weeks of the campaign gave weight to the moment. The political tension was clear as Sen. Barack Obama walked to the Republican side of the aisle to greet Sen. John McCain, who offered a chilly look and a brief return handshake.

McCain did not make remarks on the legislation. Obama, in his speech, said the bailout plan was regrettable but necessary and he referred to the stock market drop after the House vote. "While that decline was devastating, the consequences of the credit crisis that caused it will be even worse if we do not act now," he said.

In the House, officials of both parties said they were increasingly confident that politically enticing provisions bootstrapped to the original bill - including $150 billion in tax breaks for individuals and businesses - would win over at least the dozen or so votes needed to reverse Monday's outcome and send the measure to President Bush.

Besides the tax breaks, senators also made a change that had drawn widespread support in recent days - an increase in the amount of bank deposits covered by the Federal Deposit Insurance Corp., to $250,000 from $100,000.

And the entire package was attached to legislation requiring insurers to treat mental health conditions more like general health problems.

As the shape of the new bill became clearer Wednesday, some House Republicans and Democrats indicated that the changes were enough to get them to take another look at the measure and perhaps change their minds - even though the new items being added would substantially increase the burden on taxpayers.

Rep. John Yarmuth, D-Ky., who on Monday voted no, said he found the new proposal more acceptable, as did Rep. Jim Ramstad, a retiring Republican from Minnesota who voted in opposition as well.

"The inclusion of parity, tax extenders and the FDIC increases has caused me to reconsider my position," Ramstad said. "All three additions have greatly improved the bill."

Leaders of both parties in the House, who spent much of Wednesday on the phone taking the temperature of lawmakers not scheduled to return until today, said they were identifying other potential converts as well, and were finding a more receptive audience for the revised measure because of the tax package and other changes.

Some conservative House Republicans and liberal Democrats remained adamantly opposed. "The bailout legislation that the Senate is sending back to the House is a fraternal twin to the one I voted against on Monday - meet the new bill, same as the old bill," said Rep. Joe Barton, R-Texas.

While popular, the tax breaks, which had been the center of a bitter dispute between House and Senate Democrats, caused problems as well.

Senate Version On Plan Included

A coalition of centrist Democrats led by Rep. Steny H. Hoyer of Maryland, the majority leader, had refused to back the tax benefits unless they were deficit neutral - offset by tax increases or spending cuts elsewhere. The bill now includes the Senate version of the tax plan, which adds most of the cost to the deficit over the next decade.

But the Senate leaders decided to present the House with a take-it-or-leave-it choice, and it is possible some Democrats could desert the bill over the tactic.

Hoyer said he was disappointed in the Senate's decision and worried it could cost Democratic votes. "All I'm trying to do is get this thing passed," said Sen. Harry Reid, D-Nev., the majority leader, denying he was trying to jam the House by giving members no choice but to accept the tax proposal he favored or again reject the bailout.

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