[R-G] Bush Plan Down but Not Out

[Anthony Fenton]

ECONOMY-US:  Bush Plan Down but Not Out
By Adrianne Appel
http://www.ipsnews.net/news.asp?idnews=44082

BOSTON, Sep 30 (IPS) - Leading U.S. lawmakers and the cabinet of Pres.  
George W. Bush met behind closed doors Tuesday to strategise a way to  
win more votes for their 700-billion-dollar plan to bail out Wall  
Street, a plan that met with stunning defeat in the U.S. House on  
Monday.

The leaders announced late Tuesday that they had arranged a vote on  
Wednesday in the Senate, even though Congress is officially on break.  
The Senate is considered more likely to approve the plan, and if it  
does, this will add pressure on the House to get on board.

"I am disappointed by the outcome, but I assure our citizens and  
citizens around the world that this is not the end of the legislative  
process," Bush said Tuesday morning.

Only 12 additional House votes are needed to pass the bill.

"The 12 people who switch will be the most powerful people in America  
over the next few days. They will shape the compromise bill," Darrell  
West, vice president and director of government studies at the  
Brookings Institution, a Washington think tank, told IPS.

Grassroots protests are planned throughout cities in the U.S. on  
Wednesday, calling for no bailout of Wall Street.

Meanwhile, economists continued to warn against the Bush plan, saying  
an entirely new approach is needed to truly free up the credit  
markets, the loans between big banks that are key to a fully  
functioning global economy.

"At this point I cannot identify a single good reason to do the [Bush]  
bailout," said Dean Baker, co-director of the Centre for Economic and  
Policy Research.

"Much of the country's political and economic leadership has been  
running around raising the prospect of the Great Depression and a  
breakdown in the banking system," Baker said. "These stories are  
absolutely not true," he added.

In the days before the vote, 400 economists signed onto a letter to  
lawmakers, urging them not to approve the Bush plan, said Rep. Peter  
DeFazio, who received the letter and voted against Bush's bill.

"If we don't get this right were going to be back looking for more  
money and our credit will be exhausted," DeFazio said.

"They warned that it's a risky bet. It's a bet that shouldn't be  
placed by taxpayers," DeFazio said.

Bush's multi-billion dollar plan went down in flames Monday in a  
narrow defeat of 205 to 228 against, made possible by the defection of  
a majority of members of his own party, the Republicans, along with  
one-third of the Democrats.

"The problem was this legislation was very poor. The idea of bailing  
out rich Wall Street institutions wins no friends," West said.

The Bush plan, crafted by Treasury Secretary Henry Paulson with input  
from Republican and Democratic leaders, would give Paulson wide  
latitude in spending700 billion dollars with little oversight. The  
bill does not curb excessive CEO compensation or assist the million  
people dealing with foreclosure of their homes.

Presidential candidates John McCain and Barack Obama called on their  
colleagues to pass the bill. Many lawmakers, however, stood firm.

"Why is it that we can find a way to bail out Wall Street, but we  
cannot help the people struggling on Main Street? People are losing  
their jobs, their homes, and struggling without health care. No one  
has come to their rescue, but yet overnight we are pressed to come to  
the aid of Wall Street," Rep. John Lewis said before voting against  
the bill.

U.S. citizens from coast to coast cried foul and flooded Congress with  
phone calls and emails telling them to vote against the bailout.  
Hundreds of lawmakers heard them.

"When I tell my constituents that a fellow named Paulson came and  
asked for 700 billion dollars for the financial industry, they say,  
'What about me? We understand the urgency of the moment, we also want  
fairness," said Rep. Elijah Cummings of Baltimore, who voted against  
the bill.

Adding to Monday's drama, the Dow Jones industrial average plunged 777  
points, the largest single-day drop in history, and governments around  
the world moved to stabilise their financial sectors. Regulators in  
Belgium, the Netherlands and Luxembourg came to the aid of Fortis, a  
Banking and insurance enterprise. Brazil's stock market dropped 9  
percent after the U.S. House vote.

The U.S. Federal Reserve made hundreds of billions more available to  
the world's central banks, the large banks that loan currency to each  
other, trying to ease the credit crunch. U.S. markets rebounded Tuesday.

The prospect of a hasty Senate vote on Wednesday did not go over well  
with Rep. Peter DeFazio, who is opposed to Bush's plan.

"We have to make sure the Senate doesn't ram this through," DeFazio  
told reporters. He and other progressive Democrats will introduce  
their own bill to aid the economy, they said.

DeFazio and a group of progressive Democrats want no part of the Bush  
plan, and Tuesday announced that they had drafted their own bill aimed  
at assisting stalled credit markets, boosting the troubled U.S.  
housing market and helping homeowners.

"It shouldn't bee too hard to come to an agreement to deal with the  
problem of lending between banks," DeFazio said.

"We need to start with a clean slate. I come from a district facing  
the highest rates of foreclosure in [Maryland]. People are losing  
their homes. We need to have a mechanism in this legislation for  
helping those homeowners," said Rep. Donna Edwards.

(END/2008)