WASHINGTON — Congressional leaders raced Thursday to round up support for a financial-rescue bill on the eve of crucial Friday vote in the House of Representatives, expressing cautious optimism that House members will reverse themselves and pass the measure.
The Senate approved the bill by a lopsided 74-25 vote Wednesday night. It was a revised version of the Bush Administration's $700 billion Wall Street bailout plan that the House rejected 228-205 on Monday. The Senate bill retained the $700 billion bailout and added $110 billion in tax breaks over 10 years to encourage more lawmakers to vote for it.
Bush administration officials and other supporters were hopeful that the Senate additions and continued turmoil in the economy will prompt enough House lawmakers to change their minds and vote for the bill on Friday.
"I think we'll get them,'' House Majority Leader Steny Hoyer, D-Md., told McClatchy. House leaders said they'll bring the bill to a vote Friday if they determine there are enough votes to pass it.
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�House Speaker Nancy Pelosi, D-Calif., embraced the Senate's revised measure, saying the inclusion of alternative energy incentives and tax breaks for ordinary citizens could help boost the plan's appeal.
Rep. Charles Rangel, D-N.Y., chairman-of the tax-writing House Ways and Means Committee, said he plans to vote for the measure despite reservations about the Senate bill, and said he's "very confident that the votes will be there" to pass the legislation.
As House members returned to Washington after a break for Rosh Hashanah, the Jewish holiday, the outcome nevertheless remained uncertain. The House rejected the original bill with 95 Democrats joining 133 Republicans to oppose what they perceived as a bailout for Wall Street fat cats.
"It's only gotten worse," said Rep. Mike Ross, D-Ark, leader of a coalition of 47 fiscally conservative Democrats known as the Blue Dogs. Although 25 members of the coalition supported the original bill, Ross said "there is a lot of heartburn" among Blue Dog members because the added tax cuts that will worsen the federal deficit.
Consequently, he said, the Senate action took "25 yes votes and potentially changed them to no votes."
Still, he said that many members of the caucus, including himself, are struggling to decide their ultimate position in the face of Democratic leadership appeals that the bill is vital to reverse the nation's economic slide.
Republican leader John Boehner, R-Ohio, worked the phone to coax votes from Republicans who initially the opposed the bill. "We're working hard," said Boehner spokesman Michael Steel. "I think we're making progress."
But asked if there would be enough Republican reversals to make a difference, Steel said, "That's an excellent question."
Rep. Gresham Barrett, a South Carolina Republican, declared late Thursday that he would switch sides and vote Friday for the rescue plan.
"If Congress does not act, the effects will be serious for American small business, families and consumers," Barrett said. "While this bill continues to contain a number of provisions that I oppose, I believe we are at the end of the legislative process and action is required."
The Senate's addition of $110 billion in tax breaks helped the measure gain passage there, and supporters were hoping the incentives would have the same impact in the House. But there was also concern that the deficit-expanding additions would anger fiscal conservatives, including 47 Democrats known as "Blue Dogs."
Leading Republican opponents showed no signs of wavering.
"I'm a firmer no," said Rep. Joe Barton, R-Texas. He said the sweeteners in the Senate bill were nothing more than an attempt to "bribe people to vote."
However, Rep. Ileana Ros-Lehtinen, R-Fla., who voted against the bill Monday, said she plans to vote for the Senate version because it now includes more relief for families, including reinstating the college tuition tax deduction and energy tax credits.
Monday's record 777-point decline in the Dow Jones Industrial Average immediately after the first House vote could prompt many House members to change their minds because of the decline in value of their constituents' stock-based pension plans, Rangel predicted.
Hoyer said that phone calls to his office were running 6-to-1 against the bill before the House vote, as angry taxpayers complained that they were being asked to pay for damage wrought by excesses on Wall Street.
However, the public's attitude shifted after many constituents saw their retirement funds hammered by the stock market drop, Hoyer said, with phone calls running only 3-to-1 against the bill since the House vote.
"People saw on Monday that it had a direct impact on them," Hoyer said. Although the market partially recovered the following day, the Bush administration and congressional leaders say the rebound is only temporary and predict that the financial crisis will worsen unless the bill is passed.
On Thursday, the Dow slid 348 points, closing not far from where it ended Monday.
President Bush, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke have warned repeatedly that failure to act will result in vital credit markets freezing up, forcing massive job losses as the economy plunges into recession.
Like the legislation the House rejected Monday, the Senate bill would create a $700 billion federal program to buy sour assets from banks and other financial firms at a steep discount. The hope is that the government would recoup much or all of that money by selling the assets later, once stability returns to the financial world.
The measure includes terms to ensure legislative oversight of the Treasury-run bailout and would give the government an ownership stake in firms that get bailed out. That would give taxpayers a share of any profits once the firms return to profitability.
The Senate version made one significant change: It would more than double the insurance that the Federal Deposit Insurance Corp. provides on customer deposits to $250,000 from the current $100,000. The higher amount would apply for one year.
The FDIC would also be granted unlimited temporary powers to borrow without limit from the Treasury to keep the banking system solvent. Economists think that the FDIC measures, if also approved by the House, would provide a boost of confidence for small community banks.
Tax breaks added by the Senate ranged from a one-year fix to prevent the alternative-minimum tax from hitting more taxpayers to extending the research credit for business to allowing rural utilities to issue tax-exempt bonds for use of renewable energy.
Also included were more obscure terms extending tax breaks for motor-sports racing tracks, makers of wooden arrows for children, and the rum excise tax for Puerto Rico and the Virgin Islands.
The tax breaks would cost the Treasury an estimated $110 billion over 10 years, according to Congress' Joint Committee on Taxation.
(Kevin G. Hall and Lesley Clark contributed to this article.)
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