Congressional leaders said that adding tax breaks and increasing federal deposit insurance should improve chances a $700 billion financial rescue plan will pass the Senate Wednesday night, a message that didn't resonate very much with a still-skidding stock market.
Some leading players on the difficult legislation also saw heightened odds in signs of greater acceptance of the measure - if not a collective embrace - from constituents, based on e-mails, calls and letters in the wake of the bill's defeat on the House floor. It was an assessment that lifted expectations for passage.
House Republican Whip Roy Blunt said calls and e-mails to congressional offices that were running about 90 percent against the measure earlier now are coming in about a "50-50" pace.
Even a 50-50 proposition might have been attractive on Wall Street, where the Dow Jones industrials at times lost more than 200 points in their third triple-digit move this week. Credit markets remained extremely tight and stocks also fell on a report that an index of manufacturing activity fell significantly in September.
President Bush was ready to call lawmakers asking for their support ahead of the crucial vote. And House Majority Leader Steny Hoyer, D-Md., said he thought the bill would go through there.
Democratic presidential nominee Barack Obama and his GOP rival, John McCain, planned to fly to Washington for the Senate vote, as did Democratic vice presidential nominee Joe Biden, adding to the political intrigue, and the White House continued to lobby hard for the legislation, both publicly and privately.
At the daily briefing Wednesday, spokesman Tony Fratto took the unusual step of waving a copy of the New York Times to cite stories in it as well as papers across the country that show evidence of the tightening credit squeeze on small businesses, municipal projects and jobs. "It is affecting real Americans out there," he said.
Fratto defended the White House against criticism of its strategy, which kept Bush more under wraps at the beginning. Fratto said the White House has been aggressive, but that there also was a decision to hold back a bit, by waiting for Bush to engage lawmakers directly, putting off a national address for days, and even sending up only a bare-bones three-page proposal at first. The idea was to walk a delicate line between urgency and respect for Congress' independence on a major issue, the spokesman said.
"There's always going to be criticism," Fratto said. "The one thing we didn't want to do was to try to jam Congress, by trying to appear that we were putting pressure on them."
The legislation essentially would allow the government to buy bad mortgages and other deficient assets held by troubled financial institutions. If successful, advocates of the plan believe, that would help lift a major weight off the already sputtering national economy.
Meanwhile some Democrats called for extending unemployment benefits, more help for low-income homeowners facing foreclosure and tighter financial regulations, reports CBS News correspondent Bob Orr.
The administration's proposal has remained largely intact despite the House setback, and supporters said prospects for congressional enactment have been improved by, among other things, a provision that would increase from $100,000 to $250,000 the amount of federal insurance for deposits.
Not only that, there were more arguments that action by Congress was imperative light of troubled and erratic markets.
"No one is glad we have reached this critical point. ... Now is our time to work not as Democrats, not as Republicans, but as guardians of the public trust," said Sen. Harry Reid, D-Nev. He said he was hopeful the measure could clear Congress within days "so that by this weekend rolling around, we will have done what we need to do for the American people."
"Confidence has taken a huge hit," financial writer Vera Gibbons told CBS' The Early Show. "Banks have made a lot of bad bets on real estate to the tune of hundreds of millions of dollars, lost a lot of money in the process. In the meantime, lost a lot of trust, a lot of confidence. That affects Main Street."
Republican Sen. Mitch McConnell of Kentucky, the minority leader, said, "We believe that we have crafted a way to go forward and to get us back on track."
Behind the scenes, the president was having lunch with Treasury chief Henry Paulson and Fed chairman Ben Bernanke to get an update and to plot strategy. He was also phoning undecided and opposed senators to try to sway their votes, and planned to do the same with House members as the vote there approaches, Fratto said.
The spokesman told reporters at the daily briefing that Bush's calls "so far have all been very positive. We feel that there's a sense of momentum."
Fratto called the increased deposit insurance "an important improvement" to the bill, and also welcomed the added tax breaks, calling them "helpful" despite the White House's initial desire for a clean bill.
The plan for Wednesday night's vote was set after leaders there agreed to add tax breaks for businesses and the middle class and increase deposit insurance in an attempt to revive the legislation rejected by the House.
Scrambling to revive a package that met with bitter derision among constituents who viewed it as a giveaway to Wall Street, the Senate added a number of sweeteners designed to please rural lawmakers, including disaster aid for hurricane-battered states and money for rural schools. The package was hitching a ride on a popular measure to require health plans for 51 or more employees to give equal treatment to mental health or addiction if they cover such illnesses.
Hoyer said he was concerned that the tax additions could complicate the chances of final congressional passage when the legislation comes back to the House floor for a vote.
There are worries that more conservative House Democrats known as "Blue Dogs" will be repulsed by the tax breaks, and could vote no because they have been saying they don't want to see the deficit run up even further.
But Blunt said he thought the chances for success also were improved by a move to ease Security and Exchange Commission accounting rules in a way that would give businesses more leeway in how they value their assets.
The tax plan passed the Senate last week on a 93-2 vote. It included AMT relief, $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana, and some $78 billion in renewable energy incentives and extensions of expiring tax breaks. All told, it would cost about $112 billion over five years.
In a compromise worked out with Republicans, the bill does not pay for the AMT and disaster provisions, but does have revenue offsets for part of the energy and extension measures.
Understanding the Wall Street Bailout How did we get here? What will be done with the $700 billion? How did we arrive at $700 billion, and will that be enough to fix things? Get the answers to these questions and more in an article by Al Tomkins at Poynter Online.
Interactive: America's Spending Spree This clickable interactive illustrates how Americans have increasingly been living beyond their means over the last 30 years.
Video: Understanding the Jobless Rate A steep rise in unemployment shows the economic troubles are far from over. AP Personal Finance Editor Trevor Delaney takes a closer look.
MyFDICInsurance.gov The Federal Deposit Insurance Corporation (FDIC) has rolled out this new web site designed to help depositors figure out how much of their assets are fully protected at FDIC-insured banks.
Michigan State Housing Development Authority MSHDA's Save the Dream Campaign includes helpful information on our Web site that assists homeowners who are experiencing financial difficulties or facing foreclosure.
Homeownership Counseling Worried you might lose your home? Locate a homeownership councelor near you.
Household Finance Calculator Analyze your household finances with a customized breakdown of your monthly expenses, savings and investments with an interactive calculator.
Panic-Proof Your Portfolio If you are buying, consider companies that pay dividends. That way you are not just relying on the rising stock price to earn money. The Motley Fool offers five ways to "panic proof" your retirement fund.
For Seniors & Caregivers Visit WWJ's Caring for Aging Parents resource center to find articles on how to manage the financial issues that arise as we age.
Top 5 Ways to Avoid Foreclosure Simple things to keep in mind, according to John Ziraldo, CEO, Lighthouse of Oakland County.
Homeowner Crisis Resource Center Find information, tool and tips from The National Foundation for Credit Counseling (NFCC), a non-profit organization.
FHA's HOPE For Homeowners The HOPE for Homeowners (H4H) program was created by Congress to help those at risk of default and foreclosure refinance into more affordable, sustainable loans. H4H is an additional mortgage option designed to keep borrowers in their homes.
Facing Foreclosure? What You Need To Know The Michigan Office of Financial and Insurance Regulation (OFIR) provides helpful tips for borrowers who find themselves in this predicament.
November 21, 2008
Worldwide Automotive Report
Congress puts aid to big three on hold. What does Roger Penske think about industry help? We talk with him one-on-one. We also tell you why Volkswagen's Diesel Jetta was named "Green Car of The Year."
Mayoral Forum-Part 3 11/20
The Booker T. Washington Association held a Mayoral Forum at the Charles H. Wright Museum Of African American History this afternoon. WWJ's Stephanie Davis moderated.
Mayoral Forum-Part 2 11/20
The Booker T. Washington Association held a Mayoral Forum at the Charles H. Wright Museum Of African American History this afternoon. WWJ's Stephanie Davis moderated.
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