11th-hour scramble for votes on bailout
Lobbying for the $700-billion financial rescue plan reached fever pitch as the hours ticked down toward today’s climactic vote in the House, with powerful interest groups orchestrating last-minute appeals from constituents back home and the two major presidential candidates working the telephones.
Supporters of the measure were hopeful of approval, saying that public fury over a bailout for Wall Street -- which helped torpedo the plan Monday -- was giving way to concern that government inaction could devastate the economy.
Those fears were given new weight Thursday by government data showing an unexpectedly steep decline in factory orders and a fresh seven-year high in claims for jobless benefits. The Dow Jones industrial average plunged nearly 350 points.
“The tide has changed,” said Rep. Ellen Tauscher (D-Alamo). “While this was initially unpopular, events are overtaking us.”
It remained uncertain, however, whether the intense pressure would shift enough votes to reverse Monday’s 228-205 defeat, and neither side was predicting victory. House Speaker Nancy Pelosi (D-San Francisco), while voicing cautious optimism, said she would not bring the measure to the floor unless it was assured of passage.
A scattered handful of members, several of them among the 133 Republicans who opposed the bill Monday, announced that they would now support it. But some fiscally conservative Democrats -- the so-called Blue Dogs -- expressed unhappiness with the package of tax breaks and other provisions added to the rescue plan in the Senate. That raised the possibility of new defections among Democrats, 95 of whom voted “no” on Monday.
The rescue plan was proposed by Treasury Secretary Henry M. Paulson as a means of restoring liquidity to a financial system battered by losses on securities tied to troubled home loans. It would give the government the power to buy these securities and get them off the books of banks and other financial institutions.
In recent days, some members of Congress who initially opposed the bill have been besieged by constituents who worry that the volatile stock market -- the Dow saw a record 777.68-point drop Monday -- threatens their retirement nest eggs.
At the same time, lawmakers are getting an earful from business owners who say they can’t get the credit they need to make payroll or buy inventory.
Typical of many who were changing course was Rep. Emanuel Cleaver (D-Mo.), who said he now supported the bill after returning home this week to see economic storm clouds hanging over his district.
“I don’t want my grandchildren or great-grandchildren to pick up a history book and find that I helped bring about a crash of the U.S. economy in 2008,” Cleaver said.
Even as they moved away from opposing the plan, many remained reluctant to commit themselves publicly. Rep. Diane Watson (D-Los Angeles), who voted “no” on Monday, said: “I’m not leaning any way right now. I’m getting information.”
Democratic presidential nominee Sen. Barack Obama (D-Ill.) spoke in favor of the bill as necessary to protect the economy and called at least one wavering House Democrat, Rep. John Yarrmuth of Kentucky, who had voted “no” but said he was now moving into the neutral category. Republican presidential nominee Sen. John McCain (R-Ariz.) also called individual lawmakers to build support for the bill, aides said.
Even House members who remained staunchly opposed to the bill said they felt the pressure to reverse course.
There are “promises and threats on both sides of the aisle,” said Rep. Darrell Issa (R-Vista). “Leadership on both sides of the aisle support this. The President, the vice president and the entire [political] donor community of America support this.”
Issa said he still opposed the bill, saying the plan approved by the Senate on Wednesday was “worse than the bill before” -- in part because of the tax breaks and other goodies that have been stuffed into the legislation to garner votes. Still, Issa predicts the measure will pass.
The country’s major business groups, including the U.S. Chamber of Commerce, the Business Roundtable and the National Assn. of Manufacturers, have been rallying their rank and file to press lawmakers to support the plan.
Bruce Josten, the top lobbyist for the Chamber of Commerce, said Monday’s loss energized him to amp up his efforts.
“We lost, no doubt about it,” he said. “I have no intention of losing again.”
Among those answering the call was Collie Hutter, an executive with Click Bond Inc., a mid-size Nevada manufacturer of industrial fasteners. Hutter said her family-owned firm had been expanding but felt the effects of the credit crunch when it bought an additional manufacturing facility and had to pay more for credit.
“No one is isolated in this,” she said. “We have to do something. This is not about Wall Street, it’s about Main Street.”
Hutter said she contacted her congressman, Rep. Dean Heller, a Republican, who has told Nevada reporters that he couldn’t “put Nevada taxpayers on the hook for the foolish excesses of Wall Street.” As of Thursday afternoon, she said, Heller had not returned her calls.
Another businessman who reached out to members of Congress was Dan Rice of Printingforless.com, who said Wall Street’s troubles had reverberated all the way to the company’s new environmentally friendly facility in Livingston, Mont. He said his firm was denied a revolving line of credit that would have allowed it to hire new workers.
“We have excellent credit. We’re positive cash flow. We’re still making money even in this down economic environment . . . yet our bank said no,” Rice said.
On Tuesday, Rice responded to a request from the U.S. Chamber by e-mailing the state’s lone congressman, Republican Dennis Rehberg, and its two Democratic senators, Max Baucus and Jon Tester, asking them to support the bailout bill.
After Monday’s defeat, the Business Roundtable, which represents chief executives at the nation’s largest companies, organized a conference call for 8:15 the next morning to discuss the issue.
Normally about two dozen CEOs participate in those calls, said the group’s president, John J. Castellani. On Tuesday morning, he said, nearly four times that many were on the call.
“It matches the level of concern after the 9/11 attacks,” he said of corporate economic fears. “It’s on that magnitude.”
The lobbying effort spread beyond the financial services sector. For the first time in its 35-year history, Microsoft Corp. weighed in on a piece of banking legislation, issuing a statement urging the House to reconsider and making sure lawmakers from its home state of Washington got the message.
On Tuesday, a diverse group of 56 trade associations, including the Air Conditioning Contractors of America, the International Dairy Foods Assn. and the National Rural Electric Cooperative Assn., jointly wrote to all members of Congress with the message that the bill must pass to “prevent a meltdown of our capital markets.”
Still, the business community’s support is not unanimous. Steven Rotman, president and owner of Ameritech Die & Mold Inc. in Mooresville, N.C., wrote both of his senators Wednesday urging them to vote “no” on the bailout.
“My biggest fear is that they are approving this without enough information and they will come back and say we need more and more and more.”
Times staff writer Nicole Gaouette contributed to this report.