House Republicans Reconsider `No' Votes on Bailout (Update1)
By Ryan Donmoyer and Lorraine Woellert
Oct. 2 (Bloomberg) -- Some House Republicans, who were instrumental in defeating a financial-market rescue package earlier this week, are reconsidering their votes amid signs the crisis on Wall Street is spreading throughout the country.
At least three Republican lawmakers,
John Shadegg of Arizona,
Jim Gerlach of Pennsylvania and
Patrick Tiberi of Ohio, may switch their ballots as the House prepares to vote on the measure again after the Senate last night approved the $700 billion bill on a 74-25 vote. A vote is likely tomorrow afternoon.
The legislation authorizes the government to buy troubled assets from financial institutions rocked by record home foreclosures. It contains provisions favored by House Republicans, including $149 billion in tax breaks, a higher limit on federal bank-deposit insurance and a change in securities laws. It also reiterates the authority of securities regulators to suspend asset-valuing rules that corporate executives blame for fueling the crisis.
Those sweeteners have helped sway Gerlach, as did phone calls from his suburban Philadelphia constituents. Many shifted from opposing the bailout to supporting it following the record 778-point drop in the
Dow Jones Industrial Average after the House's 228-205 defeat of the legislation Sept. 29.
U.S. stocks dropped today. The
Standard & Poor's 500 Index slid 33.60, or 2.9 percent, to 1,127.46 at 11.32 a.m. in New York. The
Dow Jones Industrial Average lost 274.31, or 2.5 percent, to 10,556.76.
`More Republican Votes'
House Majority Leader
Steny Hoyer said the level of support for the rescue plan among Democrats is unchanged.
``We expect there to be many more Republican votes if we're going to pass it,'' said Hoyer, a Maryland Democrat.
Gerlach's vote is one of at least 12 the proponents of the measure will need to succeed.
``The bill is becoming a much better bill,'' he said at a town-hall meeting of employees of Weston Solutions Inc., a West Chester-based environment and redevelopment company.
Shadegg, who also opposed the measure earlier this week, said he's ``strongly leaning'' toward supporting it now. Tiberi's spokeswoman Breann Gonzalez said the lawmaker is ``very encouraged'' by the changes to the Senate bill.
``The Congress now has to give the American people, indeed the economies of the world, some level of assurance that we're going to deal with this problem,'' Shadegg told ``Fox News'' last night.
Republican leaders suggested that the market reaction may spur some in their ranks to change their minds when the bill comes to a vote.
`The Big Drop'
``The big drop'' in the Dow Index ``really had a chilling effect on a lot of our members and a lot of their constituents,'' House Republican Leader
John Boehner said on Fox. With changes made by the Senate, the legislation ``has a much better chance'' of passage this time, he said.
Companies are also pushing Congress to pass the measure, saying the curtailment of credit stemming from the financial crisis may result in job cuts.
Marriott International Inc., announcing its third-quarter earnings, urged Congress to ``quickly'' approve the package. Marriott said thousands of jobs are at risk because of the inability of companies to borrow money.
Yet the addition of the tax cuts, filled with special breaks for everything from an Oregon-based maker of wooden arrows to Virgin Islands rum-makers, may turn off some deficit-wary Democrats, who supported the original rescue package but don't back tax cuts without offsetting spending cuts or tax increases.
`Personally Disappointed'
``There are people who are upset that we are making the deficit worse as we try to stabilize the economy,'' Hoyer told reporters yesterday. Hoyer said he was ``personally disappointed' by the Senate's decision to include the tax legislation in the package.
The rescue plan contains $1.7 billion worth of targeted tax breaks over the next decade, the New York Post reported today.
So far, Democrats who may be put off by the added tax cuts haven't said they're switching positions. In all, 140 Democrats backed the bill along with 65 Republicans.
Two dozen of the 44-member Blue Dog Coalition of fiscally conservative Democrats voted for the bailout. Four of them said yesterday they'll continue to back the bill, even though their caucus derided the Senate's tax measures as irresponsible as recently as Monday.
``I will vote for the package coming from the Senate,'' said Oklahoma Representative
Dan Boren. Other members of the coalition who voiced support included Representative
Jane Harman of California, Representative
Jim Marshall of Georgia and Representative
Jim Cooper of Tennessee.
Tax Provisions
The larger tax provisions are anchored by a $62 billion measure that spares the alternative minimum tax from taking effect as scheduled for some 24 million American households this year. The levy, which was designed to target millionaires in 1969 but now affects households with incomes as low as $50,000, would cost households about $2,000 each this year if Congress didn't act.
A second clause would renew dozens of expired tax breaks relied on by businesses, including a research tax credit worth billions to thousands of companies ranging from
CA Inc. to
Merck & Co. Other major business provisions include a tax break for U.S.-based companies that finance equipment sales overseas, such as
General Electric Co.
The third prong would renew about $17 billion worth of incentives for companies that produce energy from renewable sources such as solar and wind.
More Deductions
Other tax breaks in the bill include relief for people and companies affected by natural disasters. The legislation would also renew popular tax breaks for individuals such as a deduction for state and local sales taxes and a $250 deduction for teachers who buy their own classroom supplies. The legislation creates a new property tax deduction worth up to $1,000 for use by homeowners that claim the standard deduction and aren't currently able to write-off those local levies.
The legislation would pay for all the energy tax breaks and about half of the business and individual so-called extenders by curtailing breaks that oil companies get for job creation and overseas production, and by ending the deferral of taxes on profits earned in offshore funds.
President
George W. Bush, whose administration originated the bailout proposal, was working the phones this morning, pressing wavering lawmakers, his spokesman said.
``The president is continuing to reach out to House members today,'' spokesman
Tony Fratto said in an e-mail message. ``The calls have been very productive.''
Some of the 133 Republicans who opposed the measure aren't budging.
``The bill that they are going to send back is the same bill that I voted against,'' Representative
Joe Barton of Texas told Bloomberg Television yesterday. ``Why would I turn around and vote for it tomorrow evening or Friday?''
...all about politics
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