Obama, McCain rush back for bailout vote

October 1, 2008 11:17:48 AM PDT
Sens. Barack Obama and John McCain will step off the presidential campaign trail and into the middle of the economic crisis when they hustle back to Washington to vote on a Senate plan to rescue Wall Street, hoping that congressional action will encourage the House to end its rebellion and pass the measure. The Senate is expected to pass the bill Wednesday evening, but a top House Democrat warned that tax breaks inserted into the proposal to make it more appealing to senators may complicate its acceptance in the House, which already voted down the measure once this week.

Squabbling over the $700 billion bailout can't end soon enough for Jack Welch, the former CEO and chairman of General Electric who warned on "Good Morning America" that "every day we wait, every minute we wait, increases the depth of the downturn in the economy and the length of it."

Sen. Joe Biden, Obama's vice presidential running mate who is preparing for Thursday's first and only VP debate against Alaska Gov. Sarah Palin, will also return to the Senate for the vote.

Presidential Politics Will Pause for Economic Crisis

It will be the first time the presidential candidates are back in Washington since last week, when McCain suspended his campaign to concentrate on the economic crisis, when both he and Obama met with President Bush on the issue.

Shortly after that meeting, the bailout deal unraveled amid bitter accusations that each side had politicized the issue and contributed to the shocking House vote to defeat it.

The new Senate version of the bailout was sweetened Tuesday night by additions that would allow the Federal Deposit Insurance Corp. to raise the amount of bank deposits it insures from $100,000 to $250,000, a move expected to help small businesses.

The Senate bill also includes tax breaks for businesses and the middle class, something the Senate has been trying to pass for the past several years and which the House has rejected because the Senate does not include corresponding cuts to make up the difference in the budget.

McCain projected confidence on the bill's passage during a speech at the Harry S. Truman Library in Independence, Mos. He said Congress has "awakened to the danger," and predicted doom if the bill should fail. "If the financial rescue bill fails in Congress yet again," McCain said, "the present crisis will turn into a disaster."

Obama, addressing a rally in LaCrosse,Wis., said Congress shouldn't delay any longer.

"To the Democrats and Republicans who have opposed this plan, I say this - step up to the plate do what's right for the country even if it's not popular, because the time to act is now," Obama said.

House Majority Leader Steny Hoyer, D-Md., told NBC's "Today" show that he feared the tax breaks could make it harder to win Democratic support in the House.

"There's no doubt the tax package is very controversial," Hoyer said. "There's no doubt in my mind that the Senate added this because they thought that's the only way they could get it passed."

Hoyer feared the tax issues would arouse the ire of the "Blue Dogs," a caucus of conservative Democrats who have blocked the tax breaks in the past, arguing that the tax breaks without spending cuts would increase the nation's deficit.

Rep. Roy Blunt, the GOP's main House negotiator on the bill, said the changes in the proposed bailout and a shift in public opinion following Monday's terrifying stock market plunge may help passage in the House, which could vote on it by Thursday.

Economic Crisis Challenges Lawmakers in Washington

Blunt said he's seen an anecdotal shift in opinion on the bailout or economic recovery package, saying lawmakers are receiving fewer angry calls from their districts.

The Republican congressman also said that calls and e-mails to congressional offices that were running about 90 percent against the measure earlier now are at about "50-50."

Both Blunt and Hoyer said they thought the atmosphere on the Hill was now more conducive to passage.

Welch told "GMA" that whatever gets passed must be passed soon and must pass two tests: "It must free up credit and increase confidence."

The former GE titan dismissed the significance of Tuesday's stock market surge.

"We're talking about the wrong thing when we're talking about markets, the stock market's up, the stock market's down," Welch told "GMA." "The credit market is tighter [Tuesday] than it was Monday, than it was last Friday. So it continues to tighten. And that's the game. It all about credit and confidence."

Welch said the effects of the tighter credit are already being felt by ordinary Americans in the loss of jobs, as well as businesses.

"The job thing has already started. The job thing is running away on us," Welch said, adding, "The fourth quarter could be down significantly."

Welch said a conversation with a banker illustrated how tight the credit market has become.

"He can give mortgages, but he's so selective in giving them that he's holding back cash to be sure of any eventuality. These credit markets are tighter than we have seen," Welch said.

In addition, he said, "We're seeing the lowest consumer spending in 20 years, so this is really tough."

The Associated Press and ABC News' Sunlen Miller and Bret Hovell contributed to this report.


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