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Despite furious grumbling about Senate tactics, House leaders said they expect the House will finish its business on Friday by approving a slightly modified version of the $700 billion Wall Street bailout it rejected earlier this week.
The new bill will include a giant tax package attached by the Senate that prevents the Alternative Minimum Tax (AMT) from hitting 24 million middle-income households, along with a host of other tax breaks.
The Senate’s maneuver infuriated House members, who don’t want the cost of the tax breaks added to the deficit. But aides say the political risk of blocking the bailout has grown too large since Monday’s stock market plunge, which erased $1.2 trillion in market value. One leadership aide called passage “a fait accompli.”
Even members who weren’t spooked by the largest point drop in the history of the Dow Jones average have noticed a significant change in the tenor of their constituent calls. Poll numbers show that while people don’t like the bailout package, even more fear its failure.
“We’re going to get rolled,” said a top aide to a Democratic representative who’d supported the bill Monday but didn’t like the Senate’s handling of the tax provisions. “House members who care about fiscal discipline are being backed into a corner here.”
At press time, the Senate was scheduled to vote on the bill on Wednesday night.
The bailout package failed 205-228 in the House on Monday. A change in 12 votes from no to yes would have passed the bill.
House Majority Leader Steny Hoyer (D-Md.) said Republicans need to deliver 35 more votes than the 65 they had Monday.
Republicans indicated that they expect support to grow in their conference, now that the AMT patch has been added to the bill along with a measure temporarily increasing the Federal Deposit Insurance Corporation (FDIC) maximum for bank deposits from $100,000 to $250,000. Aides to House Minority Leader John Boehner (R-Ohio) said he’d spoken to senators and green-lighted the plan.
Aides said GOP members were also heartened by the Securities and Exchange Commission’s (SEC) decision to loosen “mark-to-market” accounting rules on banks.
“We hope that the new FDIC provision, as well as the SEC’s action on mark-to-market … and the inclusion of the AMT patch and other extenders will increase the appeal of this package to House Republicans,” a Republican aide said.
The $149 billion AMT and tax credit extension package is extremely popular in the Senate, where it passed 93-2 last week. But it could cost the support in the House of some conservative “Blue Dog” Democrats.
Many Blue Dogs supported the bailout Monday, but voted against a Senate “AMT patch” that wasn’t “paid for” with spending cuts or budget-balancing tax hikes. And Blue Dogs were furious with the Senate tax package.
They held a news conference in which Hoyer criticized senators of “legislating by blunt force” by dropping the bill on the House at the end of the session. And other Blue Dogs had harsh words for the other chamber.
“I know some of them are old and stodgy. They need an opportunity to clear their heads,” said Rep. Dennis Cardoza (D-Calif.) after the news conference. “Maybe that’s why we need to pass mental health parity. They need their meds.”
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