· An Oct. 4 Business headline, an Oct. 4 A-section graphic and an Oct. 3 Page One article incorrectly said that rum makers would receive tax breaks as part of the $700 billion financial rescue package. Rum distillers pay a federal excise tax; the legislation turns over those tax payments to the local governments of Puerto Rico and the U.S. Virgin Islands, where rum is produced.
Support Rallied as House Readies for Its Second Bailout Vote
Friday, October 3, 2008
A tide of lobbyists representing corporate executives, small-business owners, farmers and retirees swamped Capitol Hill yesterday in hopes of pushing an emergency economic rescue plan through Congress, but the fate of the measure remained uncertain as the House prepared for a climactic vote at midday today.
Leaders of both parties said they were optimistic that they would be able to marshal more support for the Bush administration's $700 billion bailout than they mustered on Monday, when the House delivered a shocking defeat to the measure and sent the Dow Jones industrial average plummeting 778 points, or about 7 percent.
The market's gut-wrenching reaction offered lawmakers a glimpse of the consequences they could face if they don't approve the bailout package. Since Monday, investors' angst over the fate of the legislation has contributed to a gloomy week on Wall Street. The Dow fell more than 3 percent yesterday, with losses extending beyond the financial services industry to include agriculture, construction and industrial stocks.
Meanwhile, indicators have shown the outlook for the economy to be bleak. Yesterday, the Commerce Department reported that orders for manufactured goods dipped 4 percent in August, the largest decline since October 2006. Last week, new claims for unemployment benefits jumped to a seven-year high.
Some analysts say the economy will not pick up until the middle of next year, even if the Bush administration succeeds on Capitol Hill today. And even if Congress approves the bailout, it may be too little, too late to unfreeze global credit markets. The package might not do much to help offset shrinking bank balance sheets or free up capital for nonfinancial companies, experts say.
Alarmed by signs of deterioration in the markets, the Senate on Wednesday rushed to approve a version of the plan revised to appeal to skeptical lawmakers, adding an array of tax cuts and a temporary increase in the cap on federal insurance for bank deposits. Federal regulators have eased accounting rules that some lawmakers say have crippled local banks. And the White House has called in shock troops from a long list of business and consumer groups whose members are sending a message to lawmakers that the financial crisis is real and hitting Main Street hard.
Yesterday, as a trickle of lawmakers declared that they would switch their "no" votes to "yes," House Speaker Nancy Pelosi (D-Calif.) said that she would not permit a repeat of Monday's chaotic scene and that she would cancel today's vote rather than watch the measure fail again.
"We're not going to take a bill to the floor that doesn't have the votes," Pelosi said. "I'm optimistic that we will take a bill to the floor."
President Bush yesterday urged House lawmakers to "get this bill passed," warning that the financial crisis "has gone way beyond New York and Wall Street."
"This is an issue that's affecting hardworking people. They're worried about their savings, they're worried about their jobs, they're worried about their houses, they're worried about their small businesses," Bush said after meeting with a group of business leaders in the Old Executive Office Building. "The House of Representatives must listen to these voices and get this bill passed so we can get about the business of restoring confidence."
The president's remarks were part of a concerted campaign by the White House and major business groups to gain approval for the administration's proposal, which would authorize the Treasury Department to buy up the bad assets of faltering financial institutions in hopes of restoring investors' confidence and unfreezing lending. Caught off-guard by the measure's surprise defeat in the House, the groups are pressing to convince lawmakers that government intervention is urgently needed to save retirement accounts and keep small businesses afloat.
Over the past three days, groups as varied as AARP and the National Federation of Independent Business have organized campaigns showering hundreds of thousands of e-mails and phone calls on members of Congress to counter a wave of calls and e-mails that, before Monday's vote, was overwhelmingly opposed to a bailout. The U.S. Chamber of Commerce also began running full-page newspaper ads highlighting what it described as a massive threat to the economy if the package is not passed.