Senate Passes Bailout Bill

The mood in the Senate was far different from that on the House floor earlier in the week when partisan sniping sent the proposal down in defeat. Senate Majority Leader Senator Harry Reid (D-NV) and Minority Leader Senator Mitch McConnell (R-KY) appealed to their colleagues in their respective caucuses to approve the measure. The proposal received strong bipartisan support in the Senate, with both presidential candidates, Democrat Senator Barack Obama and Republican Senator John McCain voting in favor of the package. Only Senator Edward Kennedy, who is at home being treated for cancer, did not vote. Senator Barack Obama spoke from the Senate floor in support of the bailout package, stating:

“The fact that we are even here voting on a plan to rescue our economy from the greed and irresponsibility of Wall Street and Washington is an outrage. It is an outrage to every American who works hard and pays their taxes and is doing their best every day to make a better life for themselves and their families. They are angry that Wall Street's mistakes have put their tax dollars at risk, and they should be. I am too. But while there is plenty of blame to go around and many in Washington and on Wall Street who deserve it, all of us - all of us - have a responsibility to solve this crisis because it affects the financial well-being of every single American. There will be time to punish those who set this fire, but now is the moment for us to come together and put the fire out.”

Senator McCain did not address the matter during the debate on the floor. The bill is filled with many items that were included to get Republicans in the House on board. However, the bill also features many of the so-called pork barrell projects that the Arizona Senator has railed against. With the number of votes secured for passage of the measure, it can be questioned why McCain did not issue a no vote or offer an official statement on the matter. The earlier plan was modified by adding several sweeteners like tax breaks and other benefits. The major changes brought in the bill after the rejection in the house include raising the FDIC insurance cap to $250,000 from the present $100,000 and a number of renewable energy tax breaks for individuals and businesses. There are also a number of provisions that will protect taxpayers. One would direct the president to propose a bill requiring the financial industry to reimburse taxpayers for any net losses from the program after five years. And the Treasury would be allowed to take ownership stakes in participating companies. There will also be another year for relief from the Alternative Minimum Tax. $250 billion will be made available immediately with the rest of the $500,000 billion coming in stages. Legislators have been hearing from constituents throughout the week and it has become apparent that there is significant public resentment toward the idea of rescuing firms that are perceived to have been reckless and contributed to the nation’s economic crisis. Public concern over the bailout proposal has been so great that the websites of the House of Representatives and Library of Congress congressional database have experienced traffic jams over the last two days that have slowed access to the sites. There were two key differences in the Senate bill compared to its House counterpart. First, it includes $150 billion in tax breaks for individuals and businesses. Second, it provides a temporary increase in the amount of bank deposits covered by the Federal Deposit Insurance Corporation to $250,000 from $100,000. The proposal was also attached to a bill that requires insurers to treat mental health in the same manner as general health care conditions, a move toward parity long sought by many lawmakers on the Hill. President Bush issued a statement after the Senate vote, applauding the approval of the package:

“The bill the Senate passed is essential to the financial security of every American. It is aimed at helping American families who need to borrow money to buy a car or fund a college education. It is aimed at helping small businesses that depend on financing to meet their payrolls and stock their shelves. And it is aimed at helping State and local governments that rely on the credit markets to fund basic services and meet the needs of their citizens.”

Earlier in the day House Majority Whip Rep. James E. Clyburn (D-SC) announced that the bailout package would be taken up in the House of Representatives on Friday.