By Paul Kane and Lori Montgomery
Washington Post Staff Writers
Tuesday, September 30, 2008
Just before lunchtime yesterday, House Minority Leader John A. Boehner (R-Ohio) and his lieutenants went through the final vote count and realized they had a problem: A rank-and-file uprising was on the verge of torpedoing a bill that had been heralded by President Bush, his top advisers and congressional leaders from both parties as the remedy for Wall Street and Main Street.
Boehner and House Minority Whip Roy Blunt (R-Mo.), recognizing the danger of the situation, discussed whether to urge Democrats to pull the bill from the floor rather than have it go down in defeat. Instead, less than three hours later, the gavel fell on a stunning rebuke to Capitol Hill leaders on both sides of the aisle.
"We did everything possible to maximize our votes. Begged, pleaded. We didn't threaten anyone. And we had a pretty good idea of where we were," Boehner said in an interview in his office after the vote.
Just 65 House Republicans -- less than one-third of Boehner's members -- and 140 Democrats supported the bill. The vote was 12 shy of a majority, even after it was held open almost an additional 30 minutes for an effort at tepid arm-twisting. As most lawmakers headed out of town for a legislative break of undetermined length, both sides broke into partisan recriminations.
Democrats blamed the failure on Republican leaders who could not deliver on a deal that had been announced 36 hours earlier in a bipartisan fashion. "This had to be a four-legged stool," House Appropriations Committee Chairman David R. Obey (D-Wis.) said, referring to the four House and Senate partisan caucuses. "They just ripped off one of the legs. I've never seen leadership as weak as theirs."
Republicans initially lashed out at House Speaker Nancy Pelosi (D-Calif.), accusing her of delivering a partisan speech before the vote and costing them a dozen votes. But later, in interviews after tempers cooled, GOP leaders said they had been fighting an uphill battle from the start -- too many conservatives rejected the idea of a large, taxpayer-funded intervention, and too many moderates came from swing districts where constituents were up in arms over the bailout.
Maybe a few more days of persuasion could have provided the extra lift, they said, but that would have also sent a bad signal to the markets.
"I can't think of another time we ever worked under that kind of deadline," Blunt said in an interview. "I think that trying to do this this morning was better than saying, 'Well, we can't get it done; let's just put it off till Thursday.' "
The bill's failure marked an amazing turnabout from early Sunday morning, when Blunt joined Pelosi, other congressional leaders and Treasury Secretary Henry M. Paulson Jr. to trumpet the bill during a 12:30 a.m. news conference. By Sunday night, after a nearly three-hour meeting of the Republican lawmakers, Boehner and Blunt declared they were behind the bill and began the process inside the Capitol known as whipping, rounding up and tallying support before a critical vote.
In private talks, House Majority Leader Steny H. Hoyer (D-Md.), who has a close relationship with Blunt, told Republicans that they should expect about 125 to 140 votes from the Democrats, whose 235 members include dozens of liberals ideologically opposed to the bailout because it would benefit Wall Street.
Democrats said yesterday that they told Boehner they would need 80 to 100 Republicans to pass the bill. Heading into yesterday's debate, Democrats said they still thought they had enough bipartisan support. In marathon negotiations over the weekend, Democrats won a key concession on limiting executive compensation, and Republicans won a key concession on a plan to establish an alternative insurance program for less-troubled assets that might not need to be purchased by the Treasury.
Both leadership teams emphasized to their caucuses that taxpayers had been protected by these and other provisions.
"We thought we had found the very basis of principle and politics," said Rep. Rahm Emanuel (D-Ill.), who led the shuttle diplomacy effort during the weekend negotiations.
Despite the joint leadership effort to corral votes, a ragtag collection of back-bench lawmakers in both parties organized their own counteroffensive.
Rep. Darrell Issa (R-Calif.) led a bipartisan group that thought much of the financial crisis could be resolved with an administrative rule change by the Securities and Exchange Commission. He invited William M. Isaac, a consultant to the financial industry and a former chairman of the Federal Deposit Insurance Corp., to the Capitol on Sunday and yesterday.
Isaac, who runs a financial services consulting firm, argued that the proposed bailout package would do little to solve the financial crisis, which he said had been caused in part by the SEC's accounting rules. Under those rules, banks and other financial institutions are required to revalue their assets based on the price at which similar assets are currently selling, even if the banks have no intention of selling the assets they hold in the near future. This is called "marking to market," and Isaac asserted that the rule had unnecessarily forced banks to claim huge paper losses on mortgage-backed assets.
Even as the House debate began yesterday, about 90 lawmakers from both parties gathered in the Capitol basement for a briefing by Isaac. Republicans looking for a much cheaper alternative to giving Paulson the authority to purchase up to $700 billion in troubled assets leapt at the idea.
"This is an artificial crisis. This is a crisis of choice, not necessity," Issa said after the vote.
Many Republicans and Democrats said Paulson's urgent demands to pass the legislation immediately were overblown. "A lot of people say we've got to do this today because of the market. But you don't do this legislation because the markets might go down by 1,000 points this week. We can live through that," Rep. Allen Boyd (D-Fla.) said before the vote. "If the answer is $700 billion of borrowed money every time the market goes down, we're dead."
Boyd ultimately supported the bill, but Rep. Barney Frank (D-Mass.), the Financial Services Committee chairman who led negotiations with Paulson, said most lawmakers who did not agree that the crisis was immediate helped bring down the legislation. "We have some people who said they don't believe there will be a reaction. And to some extent, reality is going to be the arbiter," Frank said.
The vote, scheduled for 15 minutes, was called shortly before 1:25 p.m. But leaders of both parties, anxiously eyeing the vote tally on electronic boards on the north and south ends of the chamber, realized they were behind.
Afterward, Hoyer said no one asked him to postpone the vote, so, after he gave the concluding speech, the vote began.
It was kept open even after the 15 minutes had passed, as House leaders tried to cajole members into switching their ballots. At their high-water mark, the House leaders had 207 "aye" votes to 226 "nays."
A mere 10 vote-switchers could have then passed the legislation. The Dow Jones industrial average dropped several hundred points as lawmakers cast their votes, the tallies being watched on television screens worldwide.
Pelosi pleaded with members of the Congressional Black Caucus who had voted against the bill, including Reps. John Lewis (D-Ga.) and Jesse L. Jackson Jr. (D-Ill.). Neither Lewis or Jackson would budge.
A dejected Boehner huddled with Hoyer, Blunt and Emanuel, who delivered a possible deal. If Blunt could round up a handful of GOP votes, Democrats could do the rest.
But Boehner couldn't find enough, and he said it wasn't his style to "break arms."
Lawmakers ran out of time; no more votes could be found. A few of them switched their votes to no, making the final vote 228-205.
With the market nosediving nearly 800 points, aides in Boehner's office were fielding calls from people furious that the bill had failed. It was just over the weekend that the office had been taking calls from constituents pushing for the bill's defeat.
Boehner said that, given what lawmakers were up against, "it's really amazing we got as many votes as we got."
Staff writer Anne E. Kornblut contributed to this report.