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| President Bush is silhouetted as he walks up to Air Force One for his departure from JFK International airport in New York to Washington, Wednesday, Sept. 24, 2008. The president canceled his scheduled trip to Florida for a Republican fundraiser to monitor the economy crisis. |
WASHINGTON (AP) -- Democrats won a key concession from the White House on legislation to bail out the financial industry on Wednesday, then sought to scale back the $700 billion price tag. President Bush readied a prime-time speech to rally public support for his plan to stave off a deepening economic crisis.
With the administration's original proposal deeply unpopular in Congress, top House leaders issued an upbeat statement at day's end saying that they had made progress toward revised legislation. "We are committed to continuing to work cooperatively and on a bipartisan basis to safeguard the interests of the American taxpayers," said Speaker Nancy Pelosi, D-Calif., and House Republican leader John Boehner of Ohio.
But they offered no timetable on a bailout that the administration said was needed more with each passing day.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke spent most of the day in the Capitol, shuttling between public hearings on the proposal and private meetings with lawmakers.
Presidential politics intruded, as well, when Republican John McCain said he intended to return to Washington and called on Bush to convene crisis meetings until an agreement was reached on legislation.
In their statement, Pelosi and Boehner said, "We agree that key changes should be made to the administration's initial proposal. It must include basic good-government principles, including rigorous and independent oversight, strong executive compensation standards and protections for taxpayers."
Earlier, Paulson agreed to demands from critics in both parties to limit the pay packages of Wall Street executives whose companies would benefit from the proposed bailout.
"The American people are angry about executive compensation and rightfully so," Paulson told the House Financial Services Committee. "We must find a way to address this in the legislation without undermining the effectiveness of the program."
The issue has been a much-debated point in the struggle to win congressional approval of the historic rescue of the financial industry, though the "golden parachute" money involved would be relatively insignificant compared with the huge sums being talked about.
At the same time, Democrats were asking the Bush administration to dramatically cut the size of the rescue and then come back to Congress later if they need more.
Under that plan, which was still emerging, Congress would approve a fraction of what Bush is asking for - perhaps $150 billion or $200 billion - to allow the government to begin rescuing tottering financial companies.
Pelosi has privately suggested the idea to Paulson, according to officials who spoke on condition of anonymity because the negotiations are private.
Sen. Chuck Schumer, D-N.Y., pressed Paulson on the idea Tuesday and was told it would be a "grave mistake."
Rep. Barney Frank, D-Mass., said Wednesday, "Ultimately $700 billion has to be available but ... they are making progress about how to give people some assurance that it is not going to go to $700 billion in one fell swoop."
Frank, who as chairman of the Financial Services Committee has taken a lead in the negotiations, said Paulson also "accepts the fact" that the bill will give the government an ownership stake in the companies whose bad debts are taken over, a Democratic goal.
The heart of the unprecedented plan, dramatically unveiled less than a week ago, involves the government buying up sour assets of tottering financial firms to keep them from going under and to stave off a potentially severe recession and the accompanying lost jobs and further home foreclosures.
Away from Washington, debate over the bailout became embroiled in presidential politics as Republican presidential nominee John McCain said he was returning to the capital and was asking Democratic rival Barack Obama to agree to delay their first debate, scheduled for Friday, to deal with the meltdown.
Obama said the debate should go ahead.
McCain said the Bush administration's plan seemed headed for defeat and a bipartisan solution was urgently needed.
"I do not believe that the plan on the table will pass as it currently stands, and we are running out of time," he said.
Obama said the two campaigns' staffs were working on a statement the candidates might make, spelling out major points they believe the rescue legislation must include.
Bush, who says the massive government intervention is needed to stave off economic catastrophe, planned to talk to the American people Wednesday night about how the crisis affects them, said White House press secretary Dana Perino.
Wall Street, down sharply the previous two days, basically marked time, waiting for the next shoe to drop. The Dow Jones industrials declined 29 points.
The crisis is hardly limited to the United States. Bernanke, who warned senators on Tuesday that they must act or face recession, was back on Capitol Hill Wednesday saying that global financial markets are under "extraordinary stress."
Lawmakers in both parties have strenuously objected to the plan over the past two days, Republicans complaining about federal intervention in private business and Democrats pressing to tack on help for beleaguered homeowners.
Paulson, who with Bernanke heard hours of withering criticism at a hearing on Tuesday, met for the second day with House Republicans, some of whom have announced their opposition to any federal bailout of the private financial markets that form the backbone of American capitalism.
Other Republicans appear to be more open to legislation, according to congressional and administration officials, although on different terms than the White House has proposed.
Still, most majority Democrats and minority Republicans say something must be done - and will be soon.
Pelosi met with administration officials and then told reporters, "We're moving in a productive direction." She declined to discuss specifics.
She has insisted Republican lawmakers must stand up for their own president's proposal, but they appear anything but eager to do so.
"It's a tough sell to most of our members," said Rep. Tom Davis, R-Va., after a closed-door meeting with Paulson and Bernanke. "It's a terrible plan, but I haven't heard anything better."
Compounding the administration's challenge, Republicans and Democrats both say Bush has lost credibility, particularly in cases where he argues there will be dire consequences if Congress doesn't act.
"They sold the war, they sold the stimulus package and some other things. It's the 'wolf at the door'" argument, Davis said.
Additionally, they want to allow bankruptcy judges to rewrite mortgages to ease the burden on consumers who are facing foreclosure.
Speaking to reporters Wednesday, Obama said the provision was a priority, but one that he'd be willing to sacrifice in the interest of a bipartisan deal.
He said he told Pelosi and Sen. Harry Reid, D-Nev., the majority leader, that the measure "is probably something that we shouldn't try to do in this piece of legislation."
Another demand, for provisions that give Congress greater authority over the bailout, have already been accepted in principle.
For their part, some Republicans have called for a suspension of the capital gains tax to free money for investment.
