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Senate to the rescue: Lawmakers try to save bailout plan tonight

By Doug Stone | Wednesday, Oct. 1, 2008
As the stock market roller coaster ride continues, the Senate will vote tonight on a new financial bailout or rescue package.

As the stock market roller coaster ride continues, the Senate will vote tonight on a new financial bailout or rescue package that leaders hope has enough sweeteners to succeed where the House version failed on Monday.

The New York Times reports that “top lawmakers said the Senate proposal, worked out after a day of behind the scenes maneuvering, would include tax breaks for businesses and alternative energy and higher government insurance for bank deposits. ‘It has been determined, in our judgment, this is the best thing to move forward,’ said Senator Harry Reid, Democrat of Nevada and the majority leader, in announcing the surprise move.”

The Times says the Senate proposal “would cost more than $100 billion and extend and expand many individual and business tax breaks, including tax credits for the production and use of renewable energy sources, like solar energy and wind power.” It would also shield families from the alternative minimum tax and increase federal insurance for bank deposits from $100,000 to $250,000.

The Wall Street Journal says that “the move to boost deposit-insurance limits, which the White House has raised with industry players, received a boost Tuesday when presidential candidates Sens. John McCain and Barack Obama endorsed the idea. Both candidates planned to return to Washington Wednesday for the possible Senate vote. Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., which oversees the program, said she would support temporarily raising the coverage.”

The Journal reports that “late Tuesday, the Senate leadership signaled its intention to fold into the market-rescue bill a package of business and individual tax proposals, including a measure to ease the bite of the so-called alternative minimum tax on middle-class families. House Minority Leader John Boehner (R., Ohio) ‘gave the green light’ to the idea, believing the tax package will appeal to House Republicans, a Boehner spokesman said. But the move carries risks, since such tax proposals have been unpopular among moderate Democrats in the House.”

Wake up call
The Washington Post reports that Monday’s House rejection of the rescue bill was a wakeup call in Washington. “There was a widespread sense on Capitol Hill that Monday’s vote had snapped the public to attention about the potential repercussions of Congress’s failure to act. Last week, House and Senate offices were bombarded with calls from opponents who viewed the bill as a Wall Street boondoggle. That call pattern shifted sharply after Monday’s vote, aides to lawmakers in both parties said.”

Whatever the outcome of tonight’s vote and the subsequent House vote, there is no shortage of opinion on the merits of the rescue package.

Columnist George Will, writing in The Washington Post, says: “Voting against the bill —  against putting taxpayers’ money at risk in order to clean up a mess that some people got rich by making — was easy, but not necessarily wrong. The $700 billion figure exaggerated the plan’s probable cost but accurately measured something worse — the enormous enlargement of government’s power.”

Thomas L. Friedman, The New York Times columnist, has a different take, describing his reaction to the Cuban missile crisis, the assassination of JFK and the attacks on Sept. 11, 2001.

“But this moment is the scariest of all for me because the previous three were all driven by real or potential attacks on the U.S. system by outsiders. This time, we are doing it to ourselves. This time, it’s our own failure to regulate our own financial system and to legislate the proper remedy that is doing us in.

“I’ve always believed that America’s government was a unique political system — one designed by geniuses so that it could be run by idiots. I was wrong. No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it.”

Different views
There are many other opinions and background pieces on the rescue package and the financial crisis:

National Public Radio offers commentaries by a number of economists.

In the Washington Post, two Yale Management School professors hold forth on alternatives to the rescue plan.

The Los Angeles Times explores the background of the opposition to the rescue plan.”

And the Washington Post has a new poll exploring how the crisis has affected the presidential race.

Doug Stone is a former reporter for the Minneapolis Tribune and assistant news director at WCCO-TV. He writes on national and international affairs.