INSIGHT: Senate vote puts House on bailout spot

02 October 2008 16:09  [Source: ICIS news]

By Joe Kamalick

 

WASHINGTON (ICIS news)--With overwhelming US Senate approval for the controversial $700bn (€497bn) financial rescue plan, intense pressure is building on members of the House of Representatives to follow suit and climb on the bailout bandwagon.

 

In a late-night session on Wednesday, the Senate delivered its promised approval of the rescue bill with an impressive 74-25 vote. (One member of the 100-seat Senate was absent.)

 

Senate approval of the bailout package with a simple majority by itself would have put the House on the spot. 

 

However, with the vote margin so heavily in favour of the costly plan - including yes votes by 40 Democrats and 34 Republicans - House members will be hard pressed to now reject the rescue bill.

 

Although it will resume legislative business today, Thursday, the House will not consider the Senate-approved package until Friday, according to House Majority Leader Steny Hoyer.

 

Even then, said Hoyer, the bill won’t even be put forward for a vote on the floor unless sufficient support is assured.

 

Hoyer, the second-highest ranking Democrat in the House, said that he and other leaders of both parties “are continuing to work around the clock in a bipartisan way on legislation to address the economic crisis”.

 

That means that he and other Democrat and Republican leaders will be busy throughout Thursday and into the night, twisting arms and making deals among those of their colleagues who voted against essentially the same bailout package on Monday.

 

The Senate-approved version includes tax breaks for average families and broader federal protection for personal bank accounts, features that are expected to win more support for the rescue measure among Republicans in the House.

 

“Members of the House leadership on both sides of the aisle are talking to our colleagues,” Hoyer said.

 

“If there is bipartisan, majority support for the Senate package, we will likely bring it to the floor on Friday,” Hoyer said. The majority leader doesn’t want to see the rescue package come to a vote, only to be defeated yet again - with an almost certain precipitous sell-off on Wall Street that would make Monday’s 778-point plummet look like a dip.

 

The addition of tax breaks for average income earners and greater protection for personal bank accounts is designed to appeal to conservative Republicans in the House who objected to the huge debt burden the rescue plan would put on taxpayers without offering average citizens some relief.

 

In the House defeat on Monday, 95 Democrats and 133 Republicans voted against the bailout, which was defeated by only 13 votes. Only a simple majority of 218 votes is needed for passage.

 

House leaders of both parties are waging a gamble - that the added tax breaks and bank account protections will win enough Republican support in the House to get approval for the rescue plan, even if a few more Democrats vote against it.

 

If House leaders can win over 20 or so Republicans, that would be enough even if a handful of Democrats abandoned the bill.

 

By all accounts, the stakes in Friday’s House vote couldn’t be higher.

 

Every major US industrial and service sector trade group has weighed in with support - indeed, desperate pleas - for the bailout. 

 

No one, least of all about half of the House members and many in the Senate, particularly likes the bill or the fact that it is necessary.

 

But as Cal Dooley, president of the American Chemistry Council (ACC), warned in a letter to members of Congress: “The potential failure of global capital markets would adversely affect the entire US economy, and we encourage members of the House and Senate to work together to resolve the crisis”.

 

“Without reliable access to credit, the ability of ACC member companies to pay their bills, purchase inventory, meet payroll and make critical investments in new technologies would be severely compromised,” Dooley said.

 

Dooley, once a congressman, pointed out to his former House colleagues that 96% of US manufactured goods rely on chemicals in their production processes or as end-product components, suggesting that a credit-related shutdown in the chemicals industry would have broad impact on the economy.

 

($1 = €0.71)

 

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By: Joe Kamalick
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