WASHINGTON Oct 1 Leaders in the U.S. Congress
have deployed their best weapon for winning passage of a $700
billion financial industry bailout just weeks before the
elections, attaching tax cuts to an otherwise bitter pill.
The Senate aims to vote at some stage on Wednesday evening,
after 7:30 p.m. EDT/(2330 GMT), on a retooled bill allowing the
federal government to buy bad debt held by Wall Street that is
threatening to sink the global economy.
If the bill passes the Senate, the House of Representatives
is "likely" to vote on Friday on the new version of the bill, a
senior House Democratic aide said on Wednesday.
Besides adding tax sweeteners to the bill, another
provision is being tacked on to soothe voters worried about
losing their life's savings: the federal government would
increase its bank-account insurance to $250,000 per account, up
The measure would come as three of the biggest U.S. banks
have succumbed to the crisis in recent months, with more
teetering before the Nov. 4 presidential and congressional
Senate Majority Leader Harry Reid, a Nevada Democrat,
opened the Senate session on Wednesday pleading for passage.
"I'm hopeful tonight that we'll see a strong vote in
support of this plan and that bipartisanship shown here in the
Senate today will spark the House to do the same" in coming
days, he said.
It was the House's unexpected refusal to pass a stand-alone
bailout bill on Monday that ignited the historic 778-point drop
in the Dow Jones Industrial Average, a benchmark for the U.S.
Democrats control both chambers in Congress, but need
Republican support to push through the bailout -- proposed by
Republican President George W. Bush's administration to avert
what the administration says would be a deeper financial
To try to secure bipartisan support for the bailout in both
chambers, Republican and Democratic leaders have found some
sweeteners to lure more members of each political party to get
behind the bill.
Sketching out those sweeteners, Reid spoke of renewing a
package of tax cuts that have expired or are about to expire
for the middle class, small businesses and entrepreneurs
working on renewable energy projects, which would be attached
to the bailout.
MAIN STREET, NOT JUST WALL STREET
Besides keeping tax rates lower for the middle-class, Reid
said the other provisions "will create hundreds of thousands of
jobs here in the United States," sparking investment in small
and large businesses."
Congress was determined to renew these tax breaks anyway,
in time for next April's tax filing season.
But an election-year tax cut is likely to cheer voters and
to lessen the pain felt by taxpayers spending $700 billion to
fix mistakes by Wall Street executives.
Beyond the tax cuts, congressional leaders were working
broadly to convince voters that the bailout is for "Main
Street," not just Wall Street. The House defeat of the bill was
triggered by an angry stream of voter complaints.
"This isn't for lower Manhattan," the home of the U.S.
financial district, Reid said.
Instead, unlocking the spreading credit freeze will help
"people keep their jobs ... buy a car ... be able to get a loan
for that car," Reid added.
Senate Minority Leader Mitch McConnell, the Kentucky
Republican who has seen some of his recent re-election poll
numbers sink amid the growing economic crisis, delivered a
basic economics lecture on the Senate floor, with an eye to
ECONOMY: A HUMAN BODY WITH PROBLEMS
"Our whole economy you could think of as the human body and
the credit markets as the circulatory system. Right now ... the
credit markets are frozen so the circulatory system is not
working as it should. If the circulatory system doesn't work,
it begins to choke off the body, the economy," McConnell said.
The $700 billion bailout was just what the doctor ordered,
McConnell said. "We're confident we'll be able to restore the
circulatory system," with the bill, he said.
Two of the Senate's biggest guns: presidential candidates
Barack Obama, a Democrat, and John McCain, a Republican, will
take a break from their campaigns to vote for the bill.
"It is clear that this is what we must do right now to
prevent a crisis from turning into a catastrophe," Obama told a
rally in La Crosse, Wisconsin.
McCain, in Independence, Missouri, also embraced the latest
plan, saying, "If the financial rescue bill fails in Congress
yet again, the present crisis will turn into a disaster."
House Speaker Nancy Pelosi has been working to back up that
message for voters, reminding them that if everything goes
well, the legislation could end up making the government, and
thus taxpayers, money. This is a "buy-in," not a bailout, she
(Editing by Frances Kerry)