“The patient is on the table, and we’ve got to get the paddles on it” – John Sullivan, R-Okla
By Alan K. Ota, Kathleen Hunter and Bart Jansen
(CQ) After four days of political and economic turmoil, the House on Friday reversed itself and cleared a $700 billion financial bailout package that also extends dozens of expiring tax breaks for businesses and individuals. Democratic leaders, who had said they would not put the bill on the floor again until they were confident it would pass, gave the green light late Thursday.
President Bush signed the bill (HR 1424) less than two hours after the House voted. Congressional leaders rushed through the enrollment process, speeding the legislation to the White House Friday afternoon. Bush said the package represents” decisive action to ease the credit crunch that is now threatening our economy.” But he and congressional leaders warned that it will be some time before the economy starts to turn around.
Leaders of both parties were certain by Friday morning that they had rounded up enough support to reverse the 205-228 vote Sept. 29 that sank the first version of the financial rescue plan (HR 3997). “But then again, you never stop working until you get across the finish line,” Eric Cantor, R-Va., deputy chief GOP whip, said.
The continuing decline of the stock market, a Main Street credit freeze, increased job losses and a full-court press by lobbyists for business groups, senior citizens, the renewable energy industry and dozens of other interests helped turn a number of “no” votes to “yes” between Monday and Friday.
“I think the biggest reason for the change here is the damages that started coming in…the reality of the economic damage,” said Barney Frank , D-Mass., chairman of the House Financial Services Committee and the congressional point man on the bailout package. “We will be back next year to do some serious surgery on the financial regulatory system,” Frank said. “At this point, we have to do the EMT function.”
John Sullivan , R-Okla., used much the same metaphor as he said fears about the economy pushed him to switch from “no” on Monday to “yes” on Friday. “The patient is on the table, and we’ve got to get the paddles on it,” he said.
On Monday, Democrats supported the original bailout plan by 140-95, while Republicans voted against it by 65-133. On Friday, Democrats voted 172-63 in favor of the plan; Republicans still opposed it, but much more narrowly, 91-108. Additions to the bailout plan made by the Senate, which passed the bill on Wednesday, and a change in accounting rules by the Securities and Exchange Commission clarifying the mark-to-market requirement “were very well received,” House Minority Leader Roy Blunt , R-Mo., said.
Lawmakers in both parties had complained that the barebones proposal Treasury Secretary Henry M. Paulson Jr. first rushed to Capitol Hill on Sept. 20 amounted to a “blank check.” They said the final bill was much improved, providing tighter oversight, a staged release of taxpayer funds, the option to provide federal insurance for private sales of troubled assets and expanded FDIC coverage of bank accounts.
“This bill has every known oversight mechanism ever conceived in it now,” Blunt assured the House on Friday. “This is well beyond the proposal that came to the Congress. It has the guarantees the taxpayers should ask for. And it has lots of options that weren’t in the original plan,” he said. House Speaker Nancy Pelosi, D-Calif., said the purpose of the bill was not to bail out Wall Street but to help “Mr. and Mrs. Jones on Main Street.”
Majority Leader Steny H. Hoyer , D-Md., said, “What happens on Wall Street is bound up with the jobs of millions, and the retirements of millions, and the homes of millions, and the dreams of millions.” “For their sake,” he said. “We must act, together, today.”
Bailout Plus Tax Breaks
The biggest change to the core bill was an expansion of Federal Deposit Insurance Corp. coverage to $250,000 per bank account, from $100,000 currently.
The underlying measure remained largely unchanged otherwise. It would give the Treasury Department broad authority to buy $700 billion worth of troubled assets, mostly mortgage-backed securities, in a bid to clear up the books of financial institutions and encourage them to start lending again. It would limit executive compensation of firms participating in the bailout.
The Senate attached its comprehensive tax package (HR 6049) to extend expiring tax provisions, expand incentives for renewable energy and prevent the alternative minimum tax from hitting millions more Americans. That package, along with the underlying House vehicle, also would require health insurers who offer mental health coverage to provide the benefits equal in cost and scope to traditional medical benefits.
House leaders waited until late Thursday to schedule the floor vote for Friday. “We’re not going to take a bill to the floor that doesn’t have the votes,” Speaker Nancy Pelosi, D-Calif., said. “I’m optimistic we will have the votes.” Leaders did not want to risk a second defeat of the plan, which could touch off a panic in financial markets. The stock market continued to decline Thursday, and credit markets have seized up, lending new urgency to calls for congressional action.
President Bush worked the phones seeking to win over reluctant Republicans, and presidential candidates Sens. John McCain , R-Ariz., and Barack Obama , D-Ill., were calling lawmakers to urge them to support the plan. On Friday, the White House issued a strong statement of administration support, urging the House to pass the bill quickly.
“These measures will better enable our nation’s economy to mitigate a substantial near-term risk, to smooth and accelerate its recovery from a financial market shock, and to demonstrate once again its resilience and underlying strength,” the statement said.
Switching to ‘Yes’
Republicans had voted against the first bill by more than 2-to-1, and much of this week’s arm-twisting was directed at them.. At a GOP Conference meeting Friday morning, Minority Leader John A. Boehner , R-Ohio, “thanked members who considered the consequences for the nation and who reconsidered their vote this week,” said one lawmaker who was present.
Several vote-switchers cited the new elements in the Senate package and fresh signs that the Main Street economy is under stress. The latest evidence arrived Friday morning, as the Labor Department reported that employers slashed 159,000 jobs in September – the ninth straight month of job losses. The unemployment rate was unchanged from August, at 6.1 percent.
Sue Myrick , R-N.C., said she would switch from “no” to “yes” following conversations this week with small businesses in her district. “I think it’s the best thing for the country right now,” Myrick said. “I talked to people I trust … good solid businesses,” Myrick said. “They could not get credit.” Zach Wamp , R-Tenn., another vote-switcher, said “the scope of this serious crisis is reaching regular Tennesseans from those saving for retirement to families who need loans for automobiles, homes or college and small businesses that need loans to meet payroll or expand their operations.”
Wamp was one of 11 members of the conservative Republican Study Committee caucus who switched their votes. Republicans were not the only switchers. A number of Democrats – including 13 in the Congressional Black Caucus who had been lobbied hard by Obama – also decided to switch from no to yes.
One of the most influential was John Lewis, D-Ga., who said he had concluded that “the cost of doing nothing is greater than the cost of doing something.” “The people are afraid. Their retirement savings are slipping away. Small businesses have no sales, no credit and are closing their doors,” Lewis said.
Also moving over were at least four freshman Democrats, part of the “majority makers” whose 2006 election gave the party control of the House for the first time in a dozen years. “It balances the needs of middle-class families in ways that the original bill did not,” said Maizie K. Hirono, D-Hawaii. She was joined by Betty Sutton, D-Ohio; Bruce Braley , D-Iowa, and John Yarmuth , D-Ky.
In the end, the Blue Dog caucus of fiscally conservative Democrats – which drew much attention from the House leadership this week – provided four vote switchers: Gabrielle Giffords of Arizona and Joe Baca , Adam B. Schiff and Mike Thompson . For the Sept. 30 vote, 25 Blue Dogs voted for the original bailout bill and 24 opposed it. On Friday, the caucus’s tally was 29-20.
The changes made by the Senate and the continuing credit crunch on Main Street did not win over most of the members from both parties who voted against the original bill. “Everybody is making a judgment based on their own conscience – and there’s respect for that. And I appreciate that,” said Jeff Fortenberry, R-Neb., who said he was still opposed to the legislation.
Devin Nunes, R-Calif., slammed Paulson, a former executive at Goldman Sachs, and urged his colleagues not to hand him such a huge amount of money. “Why do we need to give $700 billion to one man to play hedge fund god from the gilded offices of the United States Treasury?” Nunes said. “If the secretary wants to run a hedge fund, he should go back to Wall Street.”
William Lacy Clay, D-Md., said he planning to vote “no” a second time, although he added that personal phone calls from Obama had swayed some other members of the Congressional Black Caucus. “My calls are still running no, so I am going to follow the views of my constituents,” Clay said. “They don’t think it’s right. They have paid their bills on time. They haven’t gotten into risky mortgages. … They think Wall Street took the risk … That’s their attitude – and I agree with them.”
Dennis J. Kucinich , D-Ohio, described how a 90-year-old widow in Ohio apparently shot herself in the chest this week as sheriff’s deputies knocked on her door with eviction papers for the home where she’s lived for nearly 40 years. “This bill does nothing for the Addie Polks of the world,” Kucinich said. “This bill fails to address the fact that millions of homeowners are facing foreclosure, are facing the loss of their home. This bill will take care of Wall Street and the market may go up for a few days. But democracy is going downhill.”