Senate to vote on rehashed rescue plan

Senate leaders will vote tonight in a surprise move to resurrect US president George Bush’s $700bn (€482bn) Wall Street rescue plan.

But their proposal risks a backlash by including a tax-cut plan already rejected by the lower House of Representatives.

Senator Harry Reid, leader of the Democratic majority, who sets the Senate agenda, and Republican leader Mitch McConnell revealed their plan early today.

The Senate proposal would also raise government deposit insurance limits to $250,000 (€177,000) from $100,000 (€70,800) per account, as suggested by both presidential nominees a few hours earlier.

The move to add tax legislation – including a set of popular business tax breaks – risks opposition from House Democrats insisting they be “paid for” with savings elsewhere.

By also adding legislation to prevent more than 20 million middle-class taxpayers from feeling the bite of the alternative minimum tax, the step could build momentum from House Republicans for the Wall Street bailout.

The presidential candidates, Republican senator John McCain and Democrat senator Barack Obama, intend to fly to Washington for the votes, as does Delaware’s Senator Joe Biden, the Democratic vice presidential candidate.

The alternative minimum tax was created in the 1970s to bring in money from very rich people who avoided heavy taxes through legal loopholes; inflation and escalation in salaries over the decades have put millions of middle-class wage-earners in range of the increased tax unless it is changed.

The surprise move to have a Senate vote tonight capped a day in which supporters of the imperilled 700 billion-dollar economic rescue fought to bring it back to life, courting reluctant politicians with a variety of other sweeteners including the plan to reassure Americans their bank deposits are safe.

Wall Street, at least, regained hope. The Dow Jones industrials average rose 485 points, one day after a record 778-point plunge after the US House rejected the plan worked out by congressional leaders and the Bush administration.

Before Mr Reid and Mr McConnell’s move, lawmakers, President Bush and the two rivals to succeed him rummaged through ideas new and old, desperately seeking to change a dozen House members’ votes and pass the bail-out plan.

The tax plan passed the Senate last week on a 93-2 vote. It included the alternative tax relief, €5.68bn in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana, and €54.6bn in renewable energy incentives and extensions of expiring tax breaks. In a compromise worked out with Republicans, the Bill does not pay for the AMT (alternative minimum tax) and disaster provisions, but does have revenue offsets for part of the energy and extension measures.

But that was not enough for the House, which insisted that compensation from other expenses be supplied to offset the energy and extension parts of the package.

The Senate move seems aimed at “jamming” the House into accepting the deficit-financed tax cuts. Conservative Democrats will not like the idea, but some Congress-watchers suspect most Democrats might be willing to go along.

Still, the House is where the problems are, and leaders there were scrounging for ideas that might appeal to a few of the 133 Republicans and 95 Democrats who rejected the proposal on Monday.

Senate Banking Committee chairman Christopher Dodd, a Democrat, told reporters, “I’m told a number of people who voted No yesterday are having serious second thoughts about it.” But he added: “There’s no game plan that’s been decided.”

More in this Section

Corporation tax revenues set to be bright spot in Covid-19 economic crisisCorporation tax revenues set to be bright spot in Covid-19 economic crisis

My job: The app that assists with social-distance socialisingMy job: The app that assists with social-distance socialising

EasyJet and Carnival to be knocked from Ftse-100 after Covid-19 hitsEasyJet and Carnival to be knocked from Ftse-100 after Covid-19 hits

Denis O'Brien's Digicel in Caribbean deal with French firm that controls EirDenis O'Brien's Digicel in Caribbean deal with French firm that controls Eir


Kim Sheehan is an opera singer from Crosshaven, Co Cork, and is this year’s recipient of the Jane Anne Rothwell Award from Cork Midsummer Festival.A Question of Taste: Cork opera singer, Kim Sheehan

Developed in Ireland by Dublin-based indie gaming house Dreamfeel, If Found follows university graduate Kasio as she returns to Achill, Co Mayo, from the big city.'If Found': a story of belonging from the Irish videogame scene

B-Side the Leeside: Cork's Greatest Records - Giordaí Ua Laoghaire tells Don O’Mahony about the offbeat outfit who created some of the most innovative music on the Irish scene in the 1990sB-Side the Leeside: Nine Wassies from Bainne - A quirky slice of creativity

More time indoors is a chance to consider how we buy for our homes without being slaves to fleeting trends, writes Carol O’CallaghanMore time at home offers a chance to consider how we buy for our interiors

More From The Irish Examiner