Senate Seeks to Vote Later Today on Bailout

PHOTOS: Lawmakers Struggle With Bailout

Protesters demonstrate against the proposed bailout outside of a Bank of America in Washington. (Getty)

• A Two-Pronged Push to Aid Banks | Analysis
• Media Notes | The Bill (pdf) | Q&A Transcript

By William Branigin and Lori Montgomery

Washington Post Staff Writers
Wednesday, October 1, 2008; 6:09 PM

The Senate today took up a revised rescue package for the U.S. financial system amid new warnings from the White House, congressional leaders, the two presidential candidates and the American business community that the nation's economy faces dire consequences if the plan fails again in Congress.

Two days after the House voted down a $700 billion bailout plan, the Senate began debating a package that includes additions designed to appeal to House Republicans, two-thirds of whom voted against the plan. A Senate vote on the package is expected tonight.

The revised package includes a one-year increase in Federal Deposit Insurance Corp. caps for bank and credit union accounts, extensions of numerous business tax breaks that have expired and a fix to the alternative minimum tax for individual taxpayers.

The FDIC and tax provisions could make the bill more appealing to House Republicans, but they could also prove unpalatable to a coalition of conservative Democrats who have long opposed the tax changes. The Senate Banking Committee's chairman, Christopher J. Dodd (D-Conn.), who helped negotiate the revised package, yesterday expressed confidence that the revisions would yield a majority of House votes.

President Bush said this afternoon that the "bill has been improved" by the additions in the Senate and that he was hopeful it would pass.

"It's very important for us to be able to pass this piece of legislation so as to stabilize the situation so it doesn't get worse and that our fellow citizens lose wealth and worth," Bush said during a brief appearance in the Oval Office with the U.S. general commanding NATO forces in Afghanistan.

Campaigning in Missouri, Sen. John McCain (R-Ariz.), the Republican presidential candidate, warned today that "if we fail to act, the gears of our economy will grind to a halt." He said Congress has "awakened to the danger" of a full-fledged financial "disaster" if the bill fails. But he expressed confidence that the new version would be passed with bipartisan support.

Sen. Barack Obama (D-Ill.), the Democratic candidate, said in Wisconsin that Congress must act "to prevent a crisis from turning into a catastrophe." He urged Democrats and Republicans who have opposed the plan to "step up to the plate" and "do what's right for the country, because the time to act is now." If they do not, the country could slip into a "long and painful recession," he warned, adding: "Thousands of businesses could close. Millions of jobs could be lost."

Both McCain and Obama then headed back to Washington to vote on the package tonight.

Obama later said in a floor speech during the debate, "This is not just a Wall Street crisis; this is an American crisis. And it's the American economy that needs a rescue plan." He added, "This is not a plan to just hand over $700 billion of taxpayer money to a few banks." If handled correctly, he said, the program could recoup most or all of the outlay and may even turn a profit.

Sen. Hillary Rodham Clinton (D-N.Y.) said in the debate, "I don't think any of us want to see irresponsibility on Wall Street compounded by ineffectiveness in Washington." She said the package has been improved considerably since the Treasury Department first introduced its $700 billion bailout plan.

"This is a sink-or-swim moment for our country, and we cannot simply catch our breath," Clinton said. "We must swim for the shores."