Washington: A wave of converts from the House of Representatives jumped aboard the $700 billion financial industry bailout on Thursday on the eve of a make-or-break second vote, as lawmakers responded to an awakening among voters to the pain ahead of them if stability is not restored to the tottering economy.
Republicans and Democrats alike said appeals from credit-starved small businessmen and the Senate’s addition of $110 billion in tax breaks had persuaded them to drop their opposition.
“I hate it,” but “inaction to me is a greater danger to our country than this bill,” said Republican Rep. Zach Wamp of Tennessee, one of the 133 House Republicans who joined 95 Democrats in rejecting the measure on Monday, sending the stock market plummeting.
Still, the outcome was far from assured. Vote-counters in both parties planned to huddle first thing on Friday morning to compare notes on coming up with the dozen or so supporters needed to reverse the stunning defeat.
Lawmakers were agonizing as they decided whether to change course and back the largest government intervention in markets since the Great Depression.
Fears about an economic downturn sent the Dow Jones industrials down nearly 350 points on Thursday, three days after Monday’s historic 778-point drop. The Federal Reserve reported record emergency lending to banks and investment firms, fresh evidence of the credit troubles squeezing the country.
Democratic presidential candidate Barack Obama and his Republican rival, John McCain, phoned reluctant lawmakers for their help. McCain, in Denver, predicted the bill would pass the House.
Democratic Rep. John Lewis told a closed-door meeting of House Democrats that he will support the bill after speaking with Obama about it. Other wavering lawmakers said Obama’s entreaties had swayed them as well.
Congressional leaders worked over wayward colleagues wherever they could find them.
Rep. Steny Hoyer, the second-ranking House Democrat, said there was a “good prospect” of approving the measure but stopped short of predicting passage _ or even promising a vote. Nonetheless, a vote was expected on Friday.
“I’m going to be pretty confident that we have sufficient votes to pass this before we put it on the floor,” Hoyer said.
The top Republican vote-counter, Rep. Roy Blunt of Missouri, did predict the measure would be approved.
“A lot of people are watching,” Bush pointed out _ as if lawmakers needed reminding and he argued from the White House that the huge rescue measure was the best chance to calm unnerved financial markets and ease the credit crunch. He was calling dozens of lawmakers, a spokesman said.
Minds were changing in both parties in favor of the much-maligned measure, which would let the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets from troubled financial institutions. If the plan works, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.
Republican Rep. Ileana Ros-Lehtinen said she was switching her “no” vote to a “yes” after the Senate added some $110 million in tax breaks and other sweeteners before approving the measure on Wednesday night.
“Monday what we had was a bailout for Wall Street firms and not much relief for taxpayers and hard-hit families. Now we have an economic rescue package,” Ros-Lehtinen said.
Lobbying for bailout
Emboldened by the feverish bidding for votes, other members of both parties were demanding substantial changes to the legislation before they would vote for it.
A group of Republican opponents indicated they would back it if the price tag were slashed to $250 billion and several special tax breaks added by the Senate including for children’s archery bow makers, imported rum producers and racetrack owners _ were removed. Democrats wanted to add a way to pay for the bailout and more help for homeowners staring at foreclosure.
House Speaker Nancy Pelosi, a Democrat, said such revisions were impossible because they would slow the measure’s enactment and further shake markets.
The Senate breathed new life into the measure on Wednesday after the stinging House defeat, voting 74-25 to approve the bailout, with additions designed to appeal to key constituencies. Business lobbyists were also inundating Washington in a rush to win over wavering lawmakers in both parties.
The changes helped satisfy some Republican critics, but they angered conservative Democrats who are concerned about swelling the deficit. Still, Hoyer predicted the number of Democratic defectors “is going to be minimal.”
In efforts to appease Republican opponents, the Senate added a provision to raise, from $100,000 to $250,000, the limit on federal deposit insurance.
House Republicans also cheered a decision by the Securities and Exchange Commission this week to ease rules that force companies to devalue assets on their balance sheets to reflect the price they can get on the market.
Bush, meeting with business executives at the White House, said increasingly tight credit markets are not just hitting big banks in New York City but threatening the existence of small businesses across the United States.
The modified Senate bill extends several tax breaks popular with businesses, provisions that are favorites for most Republicans. It would keep the alternative minimum tax from hitting 20 million middle-income Americans, which appeals to lawmakers in both parties. And it would provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana.