WASHINGTON -- The House today approved a $700-billion financial rescue plan -- sweetened by $110 billion in tax cuts -- on a 263-171 vote four days after rejecting it in a move that stunned both Wall Street and Washington.
"We've made this bill better," said House Republican leader John Boehner of Ohio. "Is it perfect? No. But it clearly is better than it was a week ago."
House leaders were stunned Monday when members rejected the plan, 228-205, with Republicans charging that Speaker Nancy Pelosi (D-San Francisco) had politicized the issue by blaming President Bush's policies for the financial mess on Wall Street that has brought the economic system to a tipping point.
The rescue plan was proposed by Treasury Secretary Henry M. Paulson as a means of restoring liquidity to a financial system battered by losses on securities tied to troubled home loans. It would give the government the power to buy these securities and get them off the books of banks and other financial institutions.
With Monday's defeat, the stock market tumbled and credit got even tighter. On Wednesday, the Senate voted 74-25 to pass the bill, adding some amendments aimed at persuading some reluctant members of the House. The bill now raises the cap on assets insured by the Federal Deposit Insurance Corporation (from $100,000 to $250,000), lifts the alternative minimum tax on an estimated 24 million taxpayers and extends a popular tax break on research and development costs.
Public opinion has also shifted since Monday's vote. E-mails and calls to Congress had been overwhelmingly against what many voters perceived as a bailout of greedy Wall Street investors and incompetent business executives. And many voters are still calling with outrage, staffers said. But during a two-day recess for the Jewish holidays, many members of Congress went home to their districts and heard from small business owners that the credit crunch was making it harder for them to meet payroll, which could imperil jobs. The Labor Department reported today net loss of 159,000 jobs in September, the ninth straight month the U.S. economy has lost jobs.
"On Monday I cast a blue dog vote," said Rep. Zach Wamp (R-Tenn.), referring to "blue dog" fiscal conservatives. "Today I am casting a red, white and blue vote for this country." Praising the increase in FDIC protections, Wamp quoted investor Warren Buffet as giving his blessings to the package. "We don't have any choice," he said. "Small businesses can't meet their payrolls. Pension funds are upside down." He urged colleagues to "hold your vote over the heart and vote yes."
