How to convince a majority of 534 lawmakers to release $350 billion for financial bailouts when the last $350 billion has yet to reach taxpayers in the form of credit where they need it? Senate Majority leader Harry Reid says he has the votes to get the cash on its way to the Treasury Department, while Speaker Nancy Pelosi tries to rally support in the House by arguing that President-elect Obama will oversee the billions of spending better than President Bush has. Votes on the legislation could happen as early as Thursday.
Politics often create strange alliances: In this case, President Bush called for the second half of the Troubled Assets Relief Program (TARP) funding on Obama's behalf, creating tensions between the president-elect and his own party in Congress. During Obama's lunchtime visit with Senate Democrats Tuesday, he tried to marshal support and threatened to veto-again, going against his own party-any legislation that would block the release of the TARP funds.
Senate Republicans-who balked at the first bailout and grew more frustrated when President Bush used some of those funds to rescue U.S. automakers-are increasingly opposed to dispensing more money. Minority leader Mitch McConnell said Tuesday he would like to temporarily lift payroll tax as a condition for Republican support.
Meanwhile, Republican Sens. David Vitter (La.), Jim Inhofe (Okla.), Jim DeMint (S.C.), Jeff Sessions (Ala.), and Tom Coburn (Okla.) plan to present a resolution to disapprove the billion-dollar request.
"The TARP program completely violates America's free-market principles," said DeMint in a statement. "Its funds have not been used in the way the administration promised, there has been little to no transparency to the public, and yet the president-elect wants to use another $350 billion. This bailout plan has been a total failure and it must be stopped now."
Vitter added that the program has not followed its original purpose, and that "the TARP fund has devolved into a slush fund for the administration."
House Republican leader John Boehner has concerns about the overall federal deficit for the year-which is already passing $1 trillion.
The House Democratic vote is always more unpredictable than the Senate Democratic vote-and includes more fiscal conservatives who halted the passage of the original bailout in September last year, though it eventually passed. Top Obama officials have been on Capitol Hill to corral the votes needed.
"If we had not all acted together . . . this economic crisis would have already become an economic catastrophe," wrote top Obama economic advisor Larry Summers to congressional leaders, about the first bailout vote. "President-elect Obama believes it is not too late to change course, but it will be if we don't take dramatic action as soon as possible."
Rep. Barney Frank (D-Mass.), chair of the House Financial Services Committee, introduced legislation that adds strings to the bailout funds-addressing the housing crisis and executive pay-as a way to sweeten the deal to House Democrats.