WASHINGTON — U.S. House to America: Okay, okay!
With constituents spooked by upheaval in the stock and credit markets, and after a hard sell by political leaders of both parties, the U.S. House reversed course Friday and easily passed an $850-billion package designed to ease the nation's burgeoning economic crisis and get money on Wall Street flowing again.
President Bush promptly signed the bailout plan, which the Senate had passed Wednesday.
"By coming together on this legislation, we have acted boldly to help prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said, praising Republican and Democratic leaders of Congress. "We have shown the world that the United States of America will stabilize our financial markets and maintain a leading role in the global economy."
The House had rejected the bailout bill Monday. Since then, however, members saw the stock market take a pounding, heard warnings that inaction may lead to disaster and fielded calls from college students, small business owners and even local government officials who were finding it hard to borrow money.
When the vote was called at lunchtime, 58 members switched their votes to yea from nay, including 32 Democrats and 26 Republicans. Only two Floridians switched, Reps. Vern Buchanan, R-Sarasota, and Ileana Ros-Lehtinen, R-Miami.
"It's not a popular thing either way," said Buchanan, who like all members is up for re-election next month. "No member of Congress, whether you're a Republican or a Democrat, wants to deal with this right now. … But when that vote went down on Monday, I think a lot of people realized this crisis affects them."
In speech after speech on the House floor Friday, liberal Democrats and conservative Republicans alike made clear the choices before them were unappetizing at best and revolting at worst: Do nothing, and face the prospect of more job losses, in addition to the 159,000 the government reported Friday. Or vote for the bill and watch the federal deficit grow by nearly $1-trillion with no guarantee the bailout will actually work.
But two things happened since Monday to make the bill more palatable, members said. First, the Senate added $150-billion in sweeteners, renewing the law that allows residents of states without an income tax, like Florida, to deduct a portion of state sales taxes from their federal tax bill; extending tax breaks for solar, wind and other renewable energy; and saving millions of middle-class Americans from having to pay thousands of dollars under the Alternative Minimum Tax, or AMT.
Second, the market gave them a start: After the House voted to kill the bill Monday, the Dow Jones Industrial Average dropped nearly 778 points, about 7 percent, frightening many members and their constituents alike.
Buchanan, whose district has among the highest concentration of those over 65 in the country, said his office got 300 to 500 calls a day, many from panicked retirees. He said voters switched from being 9-to-1 against the bill to nearly even.
"A lot of them have small retirements, and they're scared to death," Buchanan said. "They maybe had $300,000 in their retirement account, and they don't have any way to make it up if it goes down to $150,000."
Although the stock market's tumble swayed public opinion, the bill is really designed to limber up the credit market, where another panic appeared to set in as the interest rate that banks charge each other for loans rose precipitously as lending institutions grew suspicious of one another's financial condition.
Members of Congress began getting calls from car dealers, basketmakers, retailers and even local governments who warned the frozen credit market was making it difficult to buy inventory or make payroll.
Rep. Adam Putnam, R-Bartow, the third-ranking House Republican and a strong proponent of the bailout, circulated an article describing how the state of Florida has been unable to borrow money for three weeks. California faces similar problems.
"The credit market is undeniably frozen," Putnam said. "When you start talking about states not being able to borrow, you're talking about a real credit crisis."
Putnam was one of only five Florida Republicans and the only member of the Tampa Bay-area delegation other than Buchanan to support the bill. Reps. C.W. Bill Young, R-Indian Shores, Ginny Brown-Waite, R-Brooksville, Kathy Castor, D-Tampa, and Gus Bilirakis, R-Palm Harbor, all voted no, just as they did Monday. Members reported getting hundreds of calls a day from voters for and against the plan.
Bilirakis said he could have accepted a smaller version, floated by some Republicans, that would have allocated $250-billion for the bailout, but the final price tag was just too high for a solution he considered suspect.
"I know that times are bad," Bilirakis said. "That doesn't mean we want to throw bad medicine at it."
Castor said that she feared taxpayers would not recoup the money and that she couldn't support a package that did not include provisions for struggling homeowners to refinance "so they can achieve a little breathing room, keep paying mortgages and remain in their homes."
And Young said that he was uncomfortable giving Treasury Secretary Henry M. Paulson absolute control over administering the bailout and that the White House and Congress rushed to embrace this plan without hearings that could have shown them a better approach.
"A good public hearing would have someone like Tom James come in and explain how Raymond James does business, because they are not in any trouble," Young said. "No hearing is not the right way to do this. They are just in a hurry to get this done, but something this important ought to be done right."
Wes Allison can be reached at email@example.com or (202) 463-0577.