Manuel Balce Ceneta/AP
Speaker of the House Nancy Pelosi

In Second Try, House Approves Bailout

October 03, 2008 02:09 PM
by findingDulcinea Staff
The House voted in favor of a revised $700 billion bailout plan Friday, capping a tumultuous week on Capitol Hill.

House Passes Bailout

The House of Representative voted Friday afternoon to pass the bailout bill, following Wednesday’s approval by the Senate. In a 263-171 vote, the Democrats had 172 yeas to 63 nays, and the Republicans had 91 yeas to 108 nays.

Democrats had assured the public that they would not attempt another House vote until the bill’s passage was secure, and on Friday a backup plan was even prepared “giving them the option to interrupt the proceedings and debate an increase in unemployment benefits, so that they could round up additional votes,” according to The New York Times.

The market plunge experienced after the first House rejection helped encourage lawmakers this time around to vote for the bill. Others also cited some of the Senate’s revisions, such as increasing the federal government’s FDIC bank insurance from $100,000 to $250,000 per account.

House Minority Leader John Boehner (R-Ohio) had pleaded with conservatives to approve the bill on Friday, Politico reports: “Let’s not kid ourselves. We’re in the middle of a recession. It’s going to be a rough ride, but it will be a whole lot rougher ride if we don’t pass this bill.”

Just before the vote, the Dow was up 290 points, the Times reported.

Background: Senate passes bill; House rejects previous version; McCain suspends campaign

The Senate passed the bailout package on Wednesday night by a vote of 74-25, as the majority of Republicans and Democrats agreed to the revised bill.

Under the plan, which the House approved on Friday, the limit for federally insured bank deposits increases from $100,000 to $250,000. The bill also changes the eligibility threshold for the alternative minimum tax (AMT), sparing approximately 24 million households from paying a collective $62 billion in taxes. It will also “extend $17 billion in benefits to companies that produce alternative energy,” according to Bloomberg.

“Some of the changes appeared aimed at enticing specific lawmakers to change their votes to ‘yes,’” the Baltimore Sun writes, including a provision to increase mental health insurance coverage, favored by Rep. Jim Ramstad, R-Minn. Also, a provision to give tax breaks to the Hollywood film industry was meant to appeal to Democratic Reps. Adam Schiff and Brad Sherman of California, both of whom opposed the original bill.

One of the tax breaks included in the bill removes a “39-cent excise tax on wooden and fiberglass arrows designed for children,” according to The Philadelphia Inquirer. The provision, proposed by Oregon Sens. Ron Wyden and Gordon H. Smith would allow the Rose City Archery company in Myrtle Point, Ore., to hold onto $200,000 a year.

Both presidential candidates approved the 451-page bill, which was fattened-up from the Treasury Department’s 3-page original proposal, and the 110-page plan that the House rejected Monday.
Earlier this week, the House narrowly rejected a $700 billion bailout proposal.

It was the defeat heard round the world, causing the Dow to plunge more than 700 points, its biggest one-day drop in history. Markets in Australia and Japan also had record losses Monday, though European markets were up on Tuesday as Wall Street recovered from the shock.

The House defeat surprised many, despite the fact that Republicans criticized the plan, and White House meetings with Congressional leaders to determine the details were described as “contentious.”

Some legislators, especially those in the House, were worried about what any proposed Wall Street bailout would cost the average American, or “Main Street.”

The bailout has changed the face of the presidential election as the economy overtakes Iraq and national security as voters’ top concern.

Last week, Sen. John McCain announced he’d suspend his campaign to help solve the crisis, and called on Sen. Barack Obama to do the same. McCain also asked that the first presidential debate be postponed. Both candidates flew back to Washington to meet with the president and congressional leaders, but Friday night’s debate went on as scheduled. Some pundits wondered whether McCain made the right choice.

Opinion & Analysis: The state of the bailout

The New York Times argued that the “sweetened” bailout bill does not address the fundamental economic problems associated with the plunging housing prices. “Leaving these Americans out of the bailout bill is unwise and unfair, but neither Congress nor the Bush administration has ever shown anywhere near the sense of urgency to rescue homeowners at the bottom of the collapse as they have for the financiers at the top of it,” according to the Times.

The San Francisco Chronicle, however, praised the Senate on its approval of a "necessary" bailout plan that “has been improved substantially.” The newspaper said, “The way the senators came together, in somber and serious deliberation, was in stark contrast to the partisan sniping that followed the demise of a bailout package in the House of Representatives.”

Despite what happens from this point on, Congress’ recent actions have been reprehensible, according to Winslow T. Wheeler of Politico. He described the House of Representatives as a “dysfunctional mess” and said the Senate is in “complete shambles.” He claimed the House no longer has the strength to muster up votes for important legislation, and the Senate, bereft of oversight, needs to enact “crude parliamentary gimmicks.” He said that the “crisis will pass,” but “nothing will change,” as the same congressmen remain in power.

Historical Context: Previous U.S. government bailouts

The U.S. government had to step in to loan money to flailing industries before, but the most they ever spent at once was an estimated $153 billion for the 1980s savings and loan crisis.

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