Wall Street's Rescue Is In Limbo

Some lawmakers say the U.S. economy may be in uncharted territory after Congress failed Monday to pass the $700 billion rescue package for the financial sector. The House lacked 23 votes to pass the legislation.

STEVE INSKEEP, host: It's Morning Edition from NPR news. Good morning, I'm Steve Inskeep. Three numbers tell us where we stand this morning. A proposed Federal bailout would cost $700 billion. The proposal failed in the House by 23 votes yesterday, and by the end of that day, the Dow Jones Industrials fell 777 points. Before going on, let's add some footnotes.

In percentage terms, the Dow has had worse days. Lawmakers are still talking, and many Americans were dubious of the rescue plan. Still, it's been a dramatic twenty-four hours, and NPR's Debbie Elliot has been covering it. Debbie, good morning.

DEBBIE ELLIOT: Good morning, Steve.

INSKEEP: She's with us live. Debbie, I have to mention the first job of congressional leaders is to count votes, how did they count wrong?

ELLIOT: I don't think they counted wrong. I think everybody knew going in that this was a tough vote, and you heard leader after leader get on the House floor yesterday, and say, I know you don't want to be here, nobody wants to be here. This is a really hard thing for us to be doing.

There was a question mark as they went in, whether conservative Republicans would be on board, and whether the liberal Democrats would be on board. And by the time, the Minority Leader John Boehner, for the Republican Party was making the closing arguments for his side, you could practically feel that the vote was about to go down.

Representative JOHN BOEHNER (Minority Leader, United States House of Representatives): We have an imperfect product, but we have a product that may work. A product that may work if we can get the votes to pass it, which I don't have to tell any of you, is in serious doubt.

INSKEEP: And once that doubt was confirmed, Debbie Elliot, you had congressional leaders blaming each other for this.

ELLIOT: Right, you could feel the fingers pointing immediately. Republicans were saying that it was House Speaker Nancy Pelosi's fault, that she got on the House floor and made a partisan speech. She did say this is part of the Republican Party's responsibility for years of fiscal mismanagement, and they weren't - the referee wasn't on the field, if you will, watching what the markets were doing.

You also then had Democrats say, well, wait a minute, you know, President Bush wanted this, Senator McCain wanted this, Treasury Secretary Paulson wanted this, your own leaders were saying, this is what was necessary to save the country from financial ruin. How could you let this happen?'

Now once all the finger pointing finished, Minority Leader Boehner said, OK, now it's time to calm down, relax, get back to work. Speaker Pelosi said the same thing. She said, what happened could not stand, she said, quote, "We must forward, and I hope the markets will take that message."

INSKEEP: Well, let's review this situation then here now. We've got a proposal that Republicans and Democrats in large numbers don't like, and neither party wants to be responsible alone for passing it either, so is there a way out?

ELLIOT: You know, that's a really good question, because I think what you have here, is a true philosophical difference among the people who voted against this. You know, you had two thirds of Republicans, most of them conservative Republicans, voting against it.

About 40 percent of the Democrats voting against it, and they want really opposite things. For instance, the Democrats say, you know, we want more regulation, we think you should, you know, charge stock transactions in order to pay for any bailout. You have conservative Republicans on the hand saying, the problem here is that there's been too much federal intervention in the markets.

We think you should cut the capital gains tax. So they seem very far apart. Now Treasury Secretary Paulson says they have to get back to the table, they have to get back to work. He came out of the White House yesterday, and had some pretty grim comments, but he also didn't seem to really offer any new path forward, any new ground.

Mr. HENRY PAULSON (Treasury Secretary, Treasury Department): We need to put something back together that works, and as you've heard me say, we believe that our plan and the plan that we developed with the Congressional leaders, and worked so hard, is a plan that works and we need a plan that works.

INSKEEP: All right, how are they going to get it?

ELLIOT: You know, that's the $700-billion question I think. As lawmakers are home this week, they'll come back Thursday. They're going to have a break. They're going to be able to hear from their constituents who are angry about this. They'll be weighing the fallout from the markets, and we'll see if they're watching their retirement plans, and if maybe the sentiment changes out there.

INSKEEP: That's NPR congressional correspondent Debbie Elliot, Debbie good to talk to you once again.

ELLIOT: Thanks Steve.

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