By Lori Montgomery and Dan Eggen
Washington Post Staff Writers
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.
"We were clearly outgunned on Monday," said the chamber's chief lobbyist, R. Bruce Josten. "We lost, no doubt about it. I have no intention of losing again."
The Bush administration has met daily with the groups, dispatching Treasury Secretary Henry M. Paulson Jr. and other members of the White House economic team to participate in gatherings and conference calls. Bush, meanwhile, personally contacted about three dozen House members -- most Republicans -- Wednesday and Thursday, according to White House spokesman Tony Fratto, who declined to say how many votes the president picked up.
"We feel somewhat optimistic that the bill has a good chance of passing," Fratto said.
By late yesterday, however, Democratic leaders were growing increasingly skeptical that the GOP would deliver many converts. Monday's vote was 228 to 205 -- meaning House leaders need to sway at least a dozen votes to prevail.
Rep. Eric Cantor (Va.), a top GOP vote counter, said the Senate's decision to add a package of tax breaks worth $108 billion next year for businesses and families was attracting Republican votes. "I'm very encouraged by where we are," he said. But only about a half-dozen Republican names were circulating as likely vote-switchers, including Reps. Zach Wamp (Tenn.), John Shadegg (Ariz.), Jim Ramstad (Minn.) and Brian P. Bilbray (Calif.).
Bilbray said that he was encouraged by administration's decision to ease accounting rules for financial firms but that he remained undecided. "I'm going to spend some quality time with the bill tonight," he said.
Several Republicans said they were contemplating withdrawing their support, including Rep. Spencer Bachus (Ala.), who was among the key negotiators on the bailout measure. Bachus yesterday joined a group of 23 Republicans who said they were angry that the Senate bill would extend four tax breaks that benefit special interests, including Puerto Rican rum makers and the manufacturers of children's wooden arrows.
"The pork barrel projects that were put in this bill ought to be a wake-up call to the public and all members of Congress," Bachus said.
Growth in support on the Democratic side appeared to hold more promise, according to one senior leadership aide. "Right now, it's falling to us to get this done," the aide said.
Among Democrats who declared new support for the bill were Reps. John Lewis (Ga.) and Emanuel Cleaver II (Mo.), both members of the Congressional Black Caucus, and Shelley Berkley (Nev.). Other possibilities were Reps. Jason Altmire (Pa.), Gabrielle Giffords (Ariz.) and John Yarmuth (Ky.).
One key bloc is the Blue Dog Democrats, mostly Southern conservatives who are sticklers for budget discipline. John Spragens, spokesman for Rep. Jim Cooper (D-Tenn.), a leader of the group, said his boss would hold firm in support of the plan despite the addition of tax cuts that would greatly increase the budget deficit. Cooper doesn't like the new bill more than "any other Blue Dog," Spragens said. "But his bottom line is, there's a bigger issue here."
Still, a handful of Blue Dogs were wavering, including Rep. Charlie Melancon (D-La.), whose spokesman described him as "100 percent undecided."
Staff writers Shailagh Murray, Paul Kane and Anita Huslin contributed to this report.