The Senate says yes

tauringhuang.

Oct 2nd 2008
From Economist.com

The Senate approves a revised version of the bail-out plan

AFP
TWO days after the House had rejected the financial bail-out plan proposed by the president and his treasury secretary, the Senate on Wednesday October 1st passed a revised version of the bill by the healthy margin of 74 votes to 25. John McCain and Barack Obama, the two candidates to be president, both flew back to Washington, DC, to vote for the bill. Both spoke in its favour, warning that a failure to act would invite calamity.

Although taxpayers should eventually recoup some or even all of the bill’s cost, both candidates admitted that it might affect their fiscal plans. Mr McCain promised a freeze on all non-essential spending. Mr Obama said he might delay some of his spending plans, but excluded his tax cuts, health-care reform, infrastructure investment, alternative energy and education. That is, all the main items on his wish-list bar expanding the armed forces.

The bill must now go back to the House, which was tentatively scheduled to vote again on Friday. George Bush praised leaders in the Senate for making "vital improvements” to the package and urged the House to approve the bill too. Having been burned once, House leaders are unlikely to call the vote unless they are sure it will pass. The optimists among them note that only 12 representatives need to change their minds. And the bill has been sweetened to woo waverers.

At the suggestion of both Mr Obama and Mr McCain, the Senate made federal insurance for bank deposits more generous to reassure nervous depositors. It will now cover the first $250,000 anyone holds at any bank, up from the previous ceiling of $100,000. The bill also includes $100 billion of assorted tax breaks and handouts, though some lawmakers deem this irresponsible given the swelling deficit. They also introduced limits on “golden parachute” severance payments to disgraced Wall Street executives.

Lawmakers had various reasons for voting “no” the first time round. Several Democrats said they did not trust Mr Bush to spend the money wisely, and in any case would have preferred it to be spent directly on homeowners struggling to avoid foreclosure. Several Republicans wanted a cheaper package that gave the government less power to meddle in the market. Some naysayers in the House will stick to their guns, but some will surely decide that circumstances demand a little flexibility in applying their principles.