A request for the remaining US$350 billion in financial industry bailout funds could come as early as yesterday as the administration of US president George W. Bush and president-elect Barack Obama tag-team uneasy lawmakers for the money.
A vote in Congress is likely as early as this week, several senators predicted after a briefing from top Obama economic adviser Larry Summers on the Wall Street bailout, as well as on Obama’s separate US$800 billion economic recovery plan.
Bush would request the additional money for the Troubled Asset Relief Program, but the incoming administration would sell the plan by laying out a series of changes in how the program is run.
More of the money would go directly to relieve homeowners threatened with foreclosure, Senate Banking Committee Chairman Christopher Dodd said.
A fuller accounting of the money already spent is needed as well, Dodd said.
“Larry Summers made a very strong argument for why it’s important and critical for the overall recovery,” Democratic Senator John Kerry said. “And I think that’s an argument that most senators understand.”
Summers sought to win over Senate Democrats even as the Republican leader of the House of Representatives, John Boehner, warned that any effort to release the additional money would be a tough sell.
A request would force a vote within days on whether to block the funding, but the deck is stacked in favor of Bush and Obama winning release of the remaining US$350 billion. Congress can pass a resolution disapproving the request, but the White House could veto the resolution; then, just one-third of either chamber would be needed to uphold the veto and win release of the money.
Senate leaders would prefer to win a majority vote, Dodd said.
The idea is to make the money available to the new administration shortly after Obama takes office next Tuesday. The unpopular bailout has featured unconditional infusions of money into financial institutions that have done little to account for it.
US Treasury Secretary Henry Paulson originally promised the money would be used to buy up toxic mortgage-related securities whose falling values have clogged credit markets and brought many financial institutions to the brink of failure.
US Senate Majority Leader Harry Reid said that Bush and Obama officials were near agreement on submitting notice to Congress about using the remaining US$350 billion.
“We’re waiting to hear from President Bush and/or president-elect Obama as to what, if anything, they’re going to do,” Reid said, “and that’s occurring as we speak.”
But to prevail, Obama and his team must soothe senators who feel burned by the way the Bush administration has used the relief program.
“The [incoming] administration ... is going to fundamentally alter how this is being managed,” Dodd said. “The concept is still very sound and solid and it is needed. But it’s not going to pass around here unless there’s a strong commitment to foreclosure mitigation.”
Work continued through the weekend on Obama’s economic recovery plan, which features aid to cash-strapped state governments, US$500 to US$1,000 tax cuts for most workers and working couples, a huge spending package blending old-fashioned public works projects with aid to the poor and unemployed, and a variety of other initiatives.
Advocates for using tax cuts to promote alternative energy won concessions and the Obama team promised to make a US$3,000 job creation tax credit — which has attracted considerable criticism — more workable.