Economy & Budget

The House voted against the $700 billion economic rescue package.

Despite the urgings of President Bush, both presidential candidates and the two parties' leaders in both chambers, 228 House members opposed the bill. Just 205 members voted for it.

The bill received support from most Democrats but from less than a third of Republicans.

The vote was held open far past its allotted 15 minutes. It started at 1:28 p.m. and lasted until 2:05 p.m.

The Dow Jones Industrial Average dropped by more than 300 points before gaining some of it back during the vote in the House over the $700 billion bailout package.

Before the vote started at approximately 1:30 p.m., the Dow was down about 300 points for Monday. It dropped another 300 points as it appeared that the bill could fail. As of 2 p.m., the Dow was down by 490.79 points for the day.

The vote is still open even though the allotted 15 minutes have elapsed.

So far, 226 members have cast votes against it and only 207 have voted for it. Only one member has not voted. Members are allowed to switch votes.

An impassioned House Minority Leader John Boehner (R-Ohio), urging members of his party to support the Wall Street bailout package finalized by congressional and administration negotiators yesterday, told House Republicans to look into their souls as they decide how they will vote on the bill.

"These are the kind of votes where we have to look into our soul and ask what's best for our country," Boehner said in a floor speech today, "not what's in the best interest of our party."

"These are the votes that separate the men from the boys and the girls from the women," Boehner told the chamber.

House Republicans have constituted the main faction opposing the bill since Treasury Secretary Henry Paulson laid it out the week before last. Boehner has worked with Democratic leaders this morning to pressure Republicans still holding out to vote in favor of the package.

A vote on the final bill is expected early this afternoon.

Rep. Spencer Bachus, the ranking member on the Financial Services Committee, just said on the House floor that he will vote for the revamped financial bailout bill.

The Alabama Republican said it is the most difficult vote in his 16 years.

He said the risk of not acting is greater than the risk of doing nothing.

Following his speech, members applauded Bachus.

House Speaker Nancy Pelosi (D-Calif.) today said that the discussion of economic reforms is far from over, warning that broader economic problems will push Congress to discuss reforms past today's expected vote on a Wall Street bailout plan.

"Make no mistake," Pelosi said on the House floor today. "When this chamber adjourns to observe Rosh Hashana, it will be doing so at the request of the chair, because this subject of how we fix our economy is not over."

Pelosi said bailout talks with the Bush administration over the weekend had been tough, and that Democrats met with resistance from administration negotiators when they expressed fears that Wall Street CEOs would be saved while other Americans would pick up the tab.

Office of Management and Budget Director Jim Nussle is urging House Minority Leader John Boehner (R-Ohio) to back the $700 billion bailout deal.

In a letter to Boehner sent Sunday, Nussle, a former GOP House member from Iowa, echoes the arguments made by the Bush administration. He says that the measure may be needed to prevent a fiscal breakdown and that it minimizes taxpayer risk.

Read it below.

Dear Leader Boehner,

I am writing to address concerns expressed about the impact of the pending financial rescue bill on the federal budget. As you know, the legislation authorizes a purchase program that allows the federal government to hold up to $700 billion in mortgages or mortgage-backed securities, and creates a program to allow federal guarantees as an alternative to direct purchases.

The $700 billion figure is substantial, of course, but the size of the problem in our financial markets requires a commitment of this size. For several reasons, however, the impact on the taxpayer will be considerably less than $700 billion.

The most important point is that the bill is not simply authorizing new spending. It authorizes the purchase of assets that, over time, will produce income and can eventually be sold. No one knows just how much these assets will sell for, but since 90 percent of mortgages are currently being paid on time and in full, we can expect a substantial payback on our investment. In some cases, if a mortgage asset is purchased at a deep discount from its face value, the taxpayer may even see a positive return on that investment.

Likewise, the guarantee program authorized in the bill is designed to be self-funded, by charging an insurance premium to cover any expected losses. When the government enters into guarantees on mortgage-related assets, the $700 billion limit for direct purchases will be reduced accordingly.

In addition, the bill authorizes the Secretary of the Treasury to accept warrants for stock in distressed financial companies, which may later be sold at a profit. Lastly, although government budget scoring does not allow us to consider macroeconomic effects, it is very likely that the financial rescue bill will prevent a devastating breakdown in our financial markets. As a result, we are likely to see higher federal revenues than would be the case without the legislation, further mitigating its cost.

I appreciate the effort you and your colleagues have devoted to considering and improving the Administration

Popular support has shot up for the Wall Street bailout proposal that will likely see a vote today in the House of Representatives, Rasmussen reports.

According to Rasmussen, 33 percent of "likely voters" now support the plan, whereas 24 percent supported it Friday. Similarly, 32 percent oppose the deal, down from 50 percent on Friday.

More information came out about the deal this weekend, as negotiators made breakthroughs early Sunday morning and released some specifics of their agreement.

Senate Republican Conference President Lamar Alexander (Tenn.) has issued a statement praising the "breakthrough" plan reached late Saturday night between House and Senate negotiators to rescue Wall Street.

Alexander's statement:

"Congress has significantly amended the Paulson plan to protect the taxpayer and get our economy moving again. If the House passes the legislation Monday, then the Senate should also act Monday so that Americans will be able to cash their paychecks, get mortgage and car loans, obtain student loans, and keep their jobs. The bill gives the Treasury secretary the authority he needs with strict oversight. And it minimizes the risk of loss to taxpayers and ensures that annual profits from the transactions go to reduce the federal debt."

New Hampshire Republican Sen. Judd Gregg, a key participant in Saturday's late-night bailout negotiations, said Sunday afternoon that both presidential candidates played a part in the deal that was reached and that final congressional votes are likely Monday.

Gregg, the ranking Republican on the Senate Budget Committee, also said negotiators Saturday night were told in no uncertain terms from leading economists that a meltdown on Wall Street was imminent if the Bush administration's $700 billion plan was not approved as soon as possible.

"Getting this done soon, promptly, is absolutely critical to the confidence of the markets," Gregg said. "I can't understate that issue."

Both Democratic presidential nominee Barack Obama and GOP nominee John McCain were in close contact with the lead negotiators throughout the nine-hour session Saturday afternoon and evening, Gregg said, and he confirmed media reports that economists' perspectives were sought as well.

On other key points, Gregg said:

Senate Budget Committee Chairman Kent Conrad (D-N.D.) emerged from Saturday night's late-night pow-wow between lead House and Senate negotiators on a $700 billion Wall Street bailout bill to report that lawyers are being consulted on final language but that "several big issues" remain unresolved.

"We're working diligently and making very good progress," Conrad said. "We've just got to keep working... We've got several big issues left to reach conclusion on."

Democrats and Republicans from both houses are trying to stitch together consensus on a bill before Sunday night, to reassure Wall Street before the financial markets reopen on Monday morning. Conrad said he remains confident that an agreement can be reached, but did not commit to a deadline.

"I believe we will get this done, I believe it is very clear that this has to be done. It is very, very important that we work diligently to get this done," Conrad said. "This is serious, serious business."

-J.T. Rushing