Senate to Move Next on Bailout

Posted September 30, 2008 at 6:55pm

Updated: 11 p.m.

Senate Majority Leader Harry Reid (D-Nev.), in a bold and potentially risky move, sought to force final passage on a revised Wall Street rescue plan by setting up a surprise Wednesday-night vote.

The plan will likely include the $700 billion package to buy up troubled mortgages, Senate-passed tax-extender legislation and a $150,000 increase on the amount of deposits the Federal Deposit Insurance Corp. insures. The tax-extender portion in particular has been a point of contention between House and Senate Democrats.

The House on Monday fell 12 votes shy of passing a proposal to provide the $700 billion, and earlier Tuesday, it was expected that the House might take up the bill again, with some possible changes, as soon as Thursday.

Jim Manley, a spokesman for Reid, said of his boss’s decision to press ahead: “After talking to a number of colleagues, and in light of the serious economic problems facing the country, Sen. Reid thought that the best way to jump-start this process would be for the Senate to go first.”

Don Stewart, a spokesman for Senate Minority Leader Mitch McConnell (R-Ky.), sent out an alert saying the measure would be subject to a filibuster-proof, 60-vote threshold. The Senate will also vote on an amendment by Sen. Bernie Sanders (I-Vt.) that would institute a five-year, 10 percent surtax on individuals with incomes exceeding $500,000 and couples that make more than $1 million. The proposal was expected to fail.

One of the Senate’s lead negotiators on the bailout package praised Reid’s decision.

“This is a brilliant move by Harry, and I believe it will help pick up votes on both sides of the aisle,” Sen. Charles Schumer (D-N.Y.) said.

The question of moving first on a revised bailout package had been percolating all day in the Senate, but a final decision to move was not made until after 6 p.m. Tuesday.

One senior Senate GOP aide said Senate leaders have a reasonable expectation that the formula they have come up with will attract enough votes for passage in the House.

“We conferred with our House counterparts, and the decision was made by the leaders that this would be a productive step,” the aide said.

Support in the Senate is strong and bipartisan. The measure is expected to pass overwhelmingly with 70 votes or more.

House leaders, however, released muted statements that did not indicate whether they support the Senate move or think it will move more House Republicans, or Democrats, to vote for the measure.

”The Senate has made a decision about how to proceed and what can pass that body. The Senate will vote [Wednesday] night, and the Congress will work its will,” Speaker Nancy Pelosi (D-Calif.) said. “House Democrats remain strongly committed to a comprehensive bill that stabilizes the financial markets, restores confidence, and protects taxpayers, and we hope Congress can agree on legislation in the very near future.”

House Majority Leader Steny Hoyer (D-Md.) was equally vague. “I am talking with my House colleagues about the Senate action and how to best proceed taking that into consideration in determining what action in the House will be most successful,” Hoyer said.

House Republicans reacted favorably. Antonia Ferrier, spokeswoman for Minority Whip Roy Blunt (R-Mo.), said, “This is encouraging news that will hopefully provide new momentum for significant bipartisan support for the bill. Mr. Blunt will be talking to his colleagues to discuss the changes to the bill.”

Though Senate aides said Reid and McConnell have largely agreed on what changes should be made to the bill, they noted that the unanimous consent decree Reid offered Tuesday night did not specify the changes and requires the approval of both leaders in order to be offered.

However, the Senate tax-extenders legislation has been controversial in the House because Blue Dog Democrats have refused to support it unless it is offset by spending cuts or revenue raisers elsewhere. Senate leaders have said Republicans have refused to vote for a bill that is fully offset.

Senate leaders are gambling that the pressure not only to vote for a bailout package but also to support tax relief and FDIC limit increases will be enough to force the House to accept the Senate deal.

The FDIC provision has broad bipartisan support, with the backing of both presidential candidates.

Presidential nominee Sen. Barack Obama (D-Ill.) said that after his Wednesday morning event in Wisconsin, he will return to Washington, D.C., for the evening vote.

A spokesman for Obama said the campaign will have details on the schedule and timing late Tuesday night.