WASHINGTON — The Senate strongly endorsed the $700-billion economic bailout plan Wednesday night, but it remained uncertain whether the legislation, even with $110-billion more in tax breaks, would be able to withstand the fierce crosswinds in the House on Friday.
A bipartisan coalition of senators, including both presidential candidates, showed no hesitation in backing a proposal that has drawn public scorn — though the outpouring has eased somewhat after a market plunge followed the House defeat on Monday.
The 74-25 Senate vote came as the Bush administration issued fresh warnings that Congress' failure to act would have dire consequences for the economy. Nine Democrats — including Florida Sen. Bill Nelson — 15 Republicans and one independent opposed the plan.
"Until we stabilize the housing markets and until we stem the record number of foreclosures, our market is simply not going to improve," Nelson said.
The proposal — which calls for spending up to $700-billion to buy bad assets from faltering financial institutions — was heavily revised to attract wider support. The bill passed Wednesday would extend an array of tax breaks worth about $110-billion to businesses and families next year, and temporarily increase the limit on federal insurance for bank deposits from $100,000 to $250,000.
The presence in the Senate of both presidential candidates gave weight to the moment. The political tension was clear as Sen. Barack Obama walked to the Republican side of the aisle to greet Sen. John McCain, who offered a chilly look and a brief return handshake.
House Republicans said the new package could attract as many as 100 GOP votes — enough to put it over the top if Democrats can garner as many votes as they did on Monday. House Majority Leader Steny Hoyer, D-Md., said he and other fiscal conservatives are angry about the addition of the tax provisions, but unlikely to abandon the package.
House Minority Leader John Boehner, R-Ohio, said he was "not taking anything for granted."
Across Washington Wednesday, politicians and interest groups worked frantically to build support. Treasury Secretary Henry Paulson also worked the phones. Business groups including the U.S. Chamber of Commerce joined the campaign, as did the AARP, whose members have inundated lawmakers with more than 110,000 e-mails in past days.
"People's nest eggs are disappearing," AARP President Bill Novelli said. "It's no secret that people are angry about bailing out Wall Street. But Wall Street is us. These are our stocks, our retirement funds and our futures."
House leaders leaned on rank-and-file members to fall in line behind the new plan, plucking out provisions to sell to specific constituencies. Party leaders hoped to lure African-American lawmakers, who voted no on Monday in surprisingly large numbers, with a new property tax deduction of up to $1,000 for homeowners who do not currently itemize deductions on their federal income taxes. Advocates say 30-million people would be eligible for the benefit.
The homeowners' deduction is part of a massive tax package that has been batted back and forth between the House and Senate for months and was tacked onto the bailout legislation.
That package includes new tax breaks for renewable energy and a much longer list of expired tax cuts that would be extended for two years. The largest, which would be extended for one year, would restrain the growth of the alternative minimum tax, a parallel tax structure that would add thousands of dollars to the tax bills of more than 20-million families next year without congressional action.
The tax package also would extend federal deductions for sales taxes in states that do not levy an income tax, including Florida, as well as for tuition and for teachers who spend their own money on classroom supplies. There are also tax breaks worth nearly $40-billion for businesses over the next 10 years.
The package also contains nearly $9-billion for disaster relief over the next 10 years, and $3.3-billion over the next decade for rural schools.
And the entire package was attached to legislation requiring insurers to treat mental health conditions more like general health problems — a long-sought goal of Sen. Pete Domenici, R-N.M., and other lawmakers.
The stock market reflected nervous jitters over a vote that was to occur after it closed. The Dow Jones industrial average was off almost 220 points during the day, but recovered to close down just 19.6 points, or 0.2 percent, at 10,831.07. After the vote, Wall Street was reacting cautiously. Stock index futures, which give an indication of how trading will proceed when the market opens, were down moderately.