How Different Is Senate Version Of Bailout Bill?
ROBERT SIEGEL, host:
But this is the bill that the Senate has before it, with the grudging support of both parties, both leaders and both presidential candidates. One question, how different is the Senate bill from the bill that failed in the House on Monday? And for the answer, we turn to Benton Ives, who is covering all this for Congressional Quarterly. Welcome to the program.
Mr. BENTON IVES (Economics and Finance Reporter, Congressional Quarterly): Thanks for having me.
SIEGEL: And, Benton Ives, what's different?
Mr. IVES: Well, in a lot of ways, the Senate bill is pretty much exactly the same as the bill that failed in the House. The rescue package itself is essentially the same. As of right now, at least, it includes only an increase in the deposit insurance level for the Federal Deposit Insurance Corporation or the FDIC. Otherwise, the rescue element is pretty much the same sort of 700 billion program designed to purchase these distressed assets that have been blowing holes in bank balance sheets.
SIEGEL: You mean, the ceiling on an uninsured deposit would go up under this from a hundred thousand to a quarter million dollars?
Mr. IVES: That's exactly right. There's a slight change in the way that the FDIC can get money from the Treasury, but since the FDIC is considered to be a full faith and credit of the U.S. government, insurance backing those lines of credits probably aren't that relevant.
SIEGEL: Then there's a tax dimension to this measure in the Senate, yes?
Mr. IVES: That's right. The Senate has added in a very interesting wrinkle, probably in an effort to win more support from reluctant House lawmakers. The Senate has tacked on a package of tax breaks that were expiring. These are tax breaks for renewable energy, for research and development, as well as a fix for the alternative minimum tax. Most of this tax package is widely supported by both parties, and the hope, probably by the Senate, is that that will spark more House interest in moving the entire package.
SIEGEL: Yeah. The theory here is that this should pass the Senate. That doesn't seem to be very much in doubt. The question is then, if it goes back to the House, would there be 12 more votes to approve it? I want you to put us in the shoes of a member of the House who either didn't vote for it on Monday or just barely was won over to voting for it. Is this that much more attractive than what they saw earlier in the week?
Mr. IVES: That is a very difficult question to answer because you've got a whole bunch of different constituencies in the House. For example, you have so called Blue Dog Democrats, these are more conservative, fiscally conservative Democrats, and they are not very happy with the Senate's version of the tax bill because it doesn't include pay force for the tax cuts, and whether or not the inclusion of these tax breaks will turn more of them off is unknown. On the other hand, you've got some Republican members who may have voted against the rescue bill who would be enticed by the inclusion of these tax breaks. But underlying all of that, you also have the fact that, while the tax bill is certainly a very important piece of legislation, the rescue legislation dwarfs it, both in potential cost and size and in policy ramifications. So, you know, including a so-called sweetener to change a member's mind may or may not work. The overriding issue of whether or not Congress should even be intervening in the markets in this way may make all of that irrelevant.
SIEGEL: There have been so many statements by senators today, to the effect or literally saying, this is not for Wall Street, this is for Main Street, this is not for the financial sector, this is for everyone who borrows to do commerce, to meet payrolls, to buy things, to build highways. It seems that people on Capitol Hill, they must assume that this bill was very badly sold earlier this week to the House.
Mr. IVES: I think that that's been one of the common complaints from certainly House Republicans, that the Treasury Department, that the White House, did a very poor job of pitching this bill both to the public and to members. And I think there's a great deal of confusion about it. I mean, the complex chain reaction that would stem from a major credit crisis, you know, how that would spill over to so called Main Street America is not a very linear, easy-to-describe process. Nonetheless, you know, the nation's top economic officials are worried about some very bad outcomes, and I think, you know, you're seeing a concerted effort by both the business community and a redoubled effort from the Treasury Department and bill supporters to convince some of those members that this is the right thing to do.
SIEGEL: That's Benton Ives, who is economics and financial reporter for Congressional Quarterly. Benton Ives, thanks a lot for talking with us.
Mr. IVES: Thank you very much.
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