History > 2008 > USA > Politics > House of Representatives (II)

House Passes Auto Rescue Plan

December 11, 2008
The New York Times
By DAVID M. HERSZENHORN
and DAVID E. SANGER

WASHINGTON — The House voted on Wednesday to approve a $14 billion government rescue of the American automobile industry, but the bailout plan, which would provide emergency loans to General Motors and Chrysler, was in jeopardy because of strong Republican opposition in the Senate.

The House approved the rescue plan by 237 to 170, mostly along party lines, with 32 Republicans mainly from states heavily dependent on the auto industry joining 205 Democrats in supporting the measure. Voting against were 150 Republicans and 20 Democrats.

The White House so far has failed to generate support among Senate Republicans, who have the power to kill the bill.

General Motors and Chrysler have said they cannot survive much longer without the federal aid, while Ford Motor Company, which is in better shape than its competitors, has said it will not seek the emergency loans.

As an amendment to the auto rescue plan, the House approved a measure that would require banks receiving assistance from the Treasury’s $700 billion economic stabilization program to detail new lending activity each quarter.

The White House chief of staff, Joshua B. Bolten, attended a lunch at the Capitol with Republican senators to persuade them to back the auto rescue plan but met stiff resistance.

Some Republican senators said the automakers should be allowed to fail. Others said the proposed oversight of the rescue by a so-called car czar was too weak. Senator George V. Voinovich, an Ohio Republican who is one of the few outspoken Republican supporters of a taxpayer-backed rescue, emerged from the lunch sounding deeply pessimistic. Mr. Voinovich said that Senate Republicans had refused to participate in negotiations with the White House because of general opposition to an auto bailout.

“The leadership did not want to participate because they felt whatever came out of the negotiations, they probably wouldn’t support,” Mr. Voinovich said. He said he still intended to vote for the plan.

The Republican leader, Senator Mitch McConnell of Kentucky, was noncommittal. The Republicans had a “spirited” discussion about the auto rescue plan, he said, but it was too soon to take a stand because they had just received a final draft of the bill.

“Everybody’s still kind of poring through it, trying to figure out exactly what it does,” Mr. McConnell said. “At this particular juncture, I couldn’t handicap for you the level of support that may exist in our conference. But we did begin a conferencewide learning process during the course of the last hour.”

Even some auto-state lawmakers were unhappy with the bailout plan the White House helped to design. “While I am fighting to save Missouri auto jobs,” said Senator Christopher S. Bond, Republican of Missouri, “Congress is just putting off the inevitable unless we force the companies to reform fundamentally, which this latest plan fails to do and is why I am offering changes to make it work.”

A number of other Senate Republicans said they had every intention of scuttling a taxpayer-financed rescue for General Motors and Chrysler.

Senator Richard C. Shelby of Alabama, the senior Republican on the banking committee, called the proposal “a travesty” and said that he would filibuster the bill. “This is an installment on a huge bailout that will come later,” he said.

Others, while critical of the legislation, suggested there was hope of a compromise.

Senator Bob Corker, Republican of Tennessee, who was working to draft alternative legislation, said the proposal put forward by the White House and Congressional Democrats provided only weak authority for the car czar, who would supervise the sweeping reorganization plans that the automakers have agreed to carry out.

“I have a banking staffer who can carry out the responsibilities of this so-called czar,” Mr. Corker said. “I mean it’s a liaison. This person has no power.”

Mr. Corker said the bill put forward by the Bush administration and Democrats and approved by the House would entangle the federal government in the operations of the auto companies for too long. Without substantial changes, he said, the legislation was unlikely to win passage in the Senate.

“I didn’t see anybody in the group who is willing to blink,” he told reporters. An aide to the Senate majority leader, Harry Reid of Nevada, said the Democrats were trying to negotiate a deal with Mr. McConnell under which there would be several votes on measures intended to aid the auto industry including, perhaps, alternative proposals by Mr. Corker or other Republicans.

Some Congressional Democrats speculated that if Senate Republicans were kill the rescue plan, the Treasury secretary, Henry M. Paulson, Jr., would have no choice but to keep G.M. and Chrysler afloat, at least until the new Congress begins early next month and wider Democratic majorities are sworn into office.

In the compromise measure that emerged from negotiations with the White House, House Democrats agreed to drop a provision to force the automakers to end their legal challenges to state emissions standards, including a lawsuit in California.

In the broadest sense, the House and Senate bills provide an identical government rescue of the two most imperiled automakers, G.M. and Chrysler, in the form of $14 billion in emergency loans. In exchange for the loans, the auto manufacturers would have to submit to strict government oversight and carry out sweeping reorganization plans.

G.M. has not said how it will respond if the federal loans are not forthcoming. It is spending more than $2 billion in cash each month, and is close to falling below the minimum level of cash needed to operate.

Without immediate federal assistance, G.M. would be in danger of not paying its suppliers, employees and creditors, and could miss interest payments on its outstanding debt. Failure to pay creditors, for example, could result in legal actions leading to a forced bankruptcy filing.

“I wouldn’t like to speculate what would unfold, but suffice it to say the survival of the company as we know it would be highly questionable if we don’t get some bridge loan,” G.M.’s vice chairman, Robert Lutz, said in an interview on Monday.

The bill would also give the government warrants to take an equity stake in the automakers. It would limit executive pay, bar golden-parachute severance packages and prohibit the paying of shareholder dividends while the emergency government loans were outstanding.

The bill would require the companies and their stakeholders, including creditors, labor unions and dealers to agree on sweeping reorganization plans that would lead to long-term financial viability. If they failed to agree, the auto czar would be able to impose a plan, and could also force the companies into bankruptcy if they failed to meet requirements.

The plan seeks to save the auto industry from what one senior White House official called “30 years of slow suicide.”

The bill sets a March 31 deadline for the automakers to produce long-term viability plans, but it is not certain how the auto czar would determine viability. Joel Kaplan, the deputy White House chief of staff, said that “simply stated, it’s that the firm will have a positive value going forward when you take into account all of its costs.”

Those costs include health care, pensions, salaries and research and development on new technologies, and depending on how they are accounted for, the companies — or the auto czar — could potentially tinker with the meaning of “viable.” Mr. Kaplan said the White House goal was “a bridge to either fundamental restructuring, or bankruptcy.”

The bill would require the automakers to seek permission from the auto czar for any business transaction of $100 million or more. Congressional Democrats said that provision was intended specifically to prevent the companies from taking any steps that would result in American manufacturing jobs moving overseas.

But with overseas markets presenting better profit opportunities for the automakers these days, the Democrats’ political goal of preserving jobs, and the overarching goal of the rescue legislation — to return the automakers to profitability — could be at odds, with the companies discouraged from seeking the most profitable markets.

The House-approved auto bailout measure would also grant federal judges a cost-of-living increase and would provide federal guarantees for financial deals that some major transit agencies are in danger of defaulting on in part because of the credit crisis.

Bill Vlasic contributed reporting from Detroit.

    House Passes Auto Rescue Plan, NYT, 11.12.2008, http://www.nytimes.com/2008/12/11/business/11auto.html

Democrats Oust

Longtime Leader of House Panel

November 21, 2008
The New York Times
By JOHN M. BRODER

WASHINGTON — Representative Henry A. Waxman wrested the chairmanship of the powerful House Energy and Commerce Committee from Representative John D. Dingell on Thursday in a coup that is expected to accelerate passage of energy, climate and health legislation backed by President-elect Barack Obama.

Mr. Waxman, 69, of California, who mounted a quiet but devastatingly effective two-week campaign against his longtime Democratic colleague, won the chairmanship with a 137-to-122 vote in the Democratic Caucus. The vote was secret, but many allies of Speaker Nancy Pelosi backed Mr. Waxman’s move, and several members said they had voted on the assumption that Ms. Pelosi had tacitly approved.

Democrats also read the signals coming from the president-elect’s transition office, which this week announced the intention to name Philip Schiliro, a longtime aide to Mr. Waxman, as the White House director of Congressional relations.

The takeover marked the fall of a third long-serving member of Congress in the last two weeks. Senator Ted Stevens, 85, Republican of Alaska, lost his re-election bid after a federal fraud conviction. Senator Robert C. Byrd, 91, Democrat of West Virginia, stepped aside as chairman of the Senate Appropriations Committee last week.

The ouster of Mr. Dingell, of Michigan, was another blow to the reeling American auto industry, which learned Thursday that it would not get any financial assistance from Congress until it showed how it could be profitable again. Mr. Dingell, who represents a suburban Detroit district, has been the industry’s most stalwart defender in Congress, having slowed or blocked many safety and environmental standards that the auto companies argued they could not meet.

Some in the industry quaked at the ascension of Mr. Waxman, whom they consider an “irrational environmental zealot,” in the words of David Cole, chairman of the Center for Automotive Research in Ann Arbor, Mich.

At a meeting of the House Democratic Caucus on Thursday morning, Mr. Dingell and his supporters delivered an impassioned plea to let him keep his post as the senior Democrat on the committee, which he has held for 28 years. But Mr. Waxman’s argument that he would be a more vigorous and effective advocate for Mr. Obama’s agenda won the day. Mr. Dingell, 82, has been hobbled by health problems and is in a wheelchair recovering from knee-replacement surgery.

Mr. Waxman described the battle with Mr. Dingell as painful, but praised his rival’s half century of service in Congress. Without directly criticizing Mr. Dingell, Mr. Waxman said he would move more quickly on the president-elect’s priorities.

“I went before the caucus and argued we needed a change in leadership and the public was clamoring for the change,” Mr. Waxman said in an interview after the vote. He said he hoped to move forward on comprehensive climate and health care legislation, simultaneously if possible.

“I think we need to act on both issues even though they’re complex and may be contentious,” Mr. Waxman said. “When a new president is elected there’s often a limited opportunity to get through major bills that he’s backed.”

Mr. Dingell was surrounded by staff members after the vote, some of them in tears, others furious. He did not speak immediately to reporters but issued a statement later recognizing that he had been swept away by brisk winds blowing at both ends of Pennsylvania Avenue.

“Well, this was clearly a change year, and I congratulate my colleague Henry Waxman on his success today,” Mr. Dingell said. “I will work closely with him on the issues facing the Energy and Commerce Committee and for a smooth transition.”

Representative John Yarmuth, a Kentucky Democrat completing his first term in Congress, said he and many other new members were sympathetic to Mr. Dingell, but believed it was time for new leadership.

“Many of the people who were elected with me didn’t come here to serve 30 years,” said Mr. Yarmuth, 61. “There is a sense of urgency among many people in my class. We came here to make some dramatic changes.”

Mr. Waxman represents Santa Monica, Beverly Hills and well-to-do areas of West Los Angeles. He has long championed clean air legislation and measures to strengthen consumer protections. He supports tougher nursing home regulation, increased federal support for disease research and subsidies for prescription drugs for the poor and the elderly.

As ranking member and chairman of the House Oversight and Government Reform Committee, he has been Congress’s grand inquisitor, conducting high-profile investigations of Wall Street, Major League Baseball, Pentagon contractors and the tobacco industry. He has also served as the chairman of the Energy and Commerce Committee’s Subcommittee on Health.

As oversight committee chairman, he had a perch to make trouble for the administration and federal agencies. As the new chairman of the Energy and Commerce Committee, he has a chance to make history as an ambitious new president takes office.

Mr. Dingell has been the top Democrat on the committee since 1981 and has been in Congress since 1955, winning the seat in a special election after his father died in office. In February, Mr. Dingell will become the longest-serving member in the history of the House. He is married to Deborah Insley Dingell, a longtime senior executive at the General Motors Corporation.

Many lawmakers and lobbyists consider the Energy and Commerce Committee to be the most influential panel in either house of Congress, one that handles, by some estimates, all or parts of two-thirds of the legislation moving through the House. Three committees in the Senate share jurisdiction over bills relating to energy, environment and commerce, all of which pass through the single House committee.

Outside the committee room is a huge NASA photograph of Earth taken from space. Mr. Dingell is fond of pointing to it in answer to questions about his committee’s jurisdiction.

Scott Segal, a lobbyist at Bracewell & Giuliani who represents a variety of energy-related interests, said that industry had no doubt that Mr. Waxman would pursue a more aggressive path on climate change legislation than Mr. Dingell would have. But he also said that, as chairman, Mr. Waxman would be constrained in what he could actually accomplish.

Mr. Segal said Mr. Waxman would have to carefully weigh the economic impact of any global warming bill he advanced.

Mr. Segal said a well-written bill could both reduce global warming and create millions of new jobs. “An improperly crafted bill might scare investment out of the energy sector entirely,” he said.

Micheline Maynard contributed reporting from Detroit.

    Democrats Oust Longtime Leader of House Panel, NYT, 21.11.2008, http://www.nytimes.com/2008/11/21/us/politics/21dingell.html?ref=washington

Change in Congress More Than a Slogan

November 21, 2008
The New York Times
By CARL HULSE

WASHINGTON — Age and seniority gave way in Congress on Thursday, a transformational shift for an institution where tremendous power has traditionally been built on sheer longevity, accumulated and savored with the passage of years.

The farewell speech of Senator Ted Stevens, 85, a 40-year member of Congress, came on the same day that House Democrats deposed Representative John D. Dingell, 82, a 53-year member, from his committee chairmanship. It was one of those moments when lawmakers could almost hear an era ending.

“This election really was about change,” said Senator Norm Coleman, Republican of Minnesota, as he sorted through the striking events of the day.

It was not only Mr. Stevens, an Alaska Republican, and Mr. Dingell, a Michigan Democrat, who found themselves treated like old bulls put out to pasture. Senator Robert C. Byrd, a West Virginia Democrat who turned 91 on Thursday and has amassed 56 years in Congress, had already voluntarily relinquished the chairmanship of his beloved Appropriations Committee before his colleagues could ease him out.

The abrupt change in status for the three lawmakers sent this fact swirling around Capitol Hill: their combined age of 258 exceeds the age of the United States itself.

The careers of other very senior lawmakers were also coming to a close, including Senator John W. Warner, 81, the Virginia Republican elected 30 years ago; Senator Pete V. Domenici, 76, the New Mexico Republican who spent 36 years in the Senate, and Representative Ralph Regula, Republican of Ohio, 84, a 36-year veteran of the House.

As they watched the procession, lawmakers said the generational transition had potential consequences for Congress, as the House and Senate were losing most of their World War II-era veterans and that unique perspective on history.

But younger lawmakers say they are being inspired to assert themselves, spurred in some respects by the success of President-elect Barack Obama, a first-term senator who this year battered the seniority system on his way to the White House, leapfrogging more experienced senators of both parties along the way.

“You have got a lot of ambitious — in a good way — and talented younger and newer members of the Congress who are trying to find ways to create their niche,” said Representative Stephanie Herseth Sandlin, a 37-year-old Democrat from South Dakota who next year will take a leadership role with the centrist Blue Dog coalition. “I think there is certainly a respect for our colleagues who are longer-serving members of Congress, but also an impatience based on what we deem to be the issues of our time and our desire to influence those issues.”

While the changes made for a remarkable moment, seniority is far from dead, and the best way to the top in Congress remains formidable staying power.

Mr. Byrd is being replaced as chairman of the Appropriations Committee by Senator Daniel K. Inouye, Democrat of Hawaii, who at 84 has spent 46 years in the Senate. Representative Henry A. Waxman, Democrat of California, the man who upended Mr. Dingell, is 69 and has been in the House since 1975. And Senate Republicans this week beat back an effort to impose term limits on their party leader and members of the Appropriations Committee.

But there was a sense in the Congress that the days were over when a lawmaker could seize a committee chairmanship and keep an ironclad grip on it for decades.

“Bit by bit, the pillars of this old institution are shaken,” said Mr. Warner as he yielded the Senate floor Thursday evening for what could be the last time. “But I am not suggesting that the pillars are not going to hold the roof over a better generation that might come along.”

Some of the pillar-shaking is coming from the very fact that serving in Congress is no longer the absolute goal of many members, and some find themselves drawn to the private sector or other government jobs, partially out of frustration at the inability to advance quickly. The interest being shown by lawmakers eager to move to the Obama administration is striking — and reflects an unwillingness to wait for a chairmanship.

Senator Hillary Rodham Clinton, Democrat of New York, for example, is in her second term and attracted millions of votes in the primary season, yet still sees herself removed from real power in the Senate. Representative Rahm Emanuel, Democrat of Illinois, a man who had already made a quick jump to leadership, gave up the No. 4 Democratic post in the House and a legitimate chance at becoming speaker to take the White House chief of staff job in the Obama administration.

In addition, some see the seniority system as fostering some of the ethics problems that have plagued the House and Senate in recent years as lawmakers grow too comfortable in their jobs, seeing the rules as flexible and themselves as untouchable.

Senator Jim DeMint, Republican of South Carolina, said he had recent instances of abuse in mind when he unsuccessfully proposed this week that Republican members of the Appropriations Committee be held to six-year terms. He said it was his view that such restrictions could curb potential corruption.

“Obviously we have had some problems in the House and Senate when it comes to that,” Mr. DeMint said.

While lawmakers said an infusion of new ideas and new blood could be healthy, they lamented the loss of experience and world view held by some of the older senators who grew up in the years of the Great Depression and helped shape America in the post-war years.

On Thursday, it was striking how members of Congress can spend a lifetime building power and pushing legislation, but how quickly it can end. It did for Mr. Stevens, his re-election bid denied, as he took the floor Thursday to remember his work on behalf of his state and reflect somberly with his colleagues and staff.

“That’s it,” he said in his final remarks, “40 years distilled into a few minutes.”

    Change in Congress More Than a Slogan, NYT, 21.11.2008, http://www.nytimes.com/2008/11/21/us/politics/21cong.html?ref=washington

Auto Chiefs Fail to Get Bailout Aid

November 20, 2008
The New York Times
By BILL VLASIC and DAVID M. HERSZENHORN

WASHINGTON — The chief executives of Detroit’s Big Three automakers departed Washington empty-handed on Wednesday night after two days of pleading for a financial lifeline on Capitol Hill.

As the public hearings and intense behind-the-scenes negotiations appeared to come to naught, the Senate majority leader, Harry Reid of Nevada, went to the floor seeking to bring up the Democrats’ plan to provide $25 billion in aid from the $700 billion financial bailout program. The Republicans objected, effectively killing the plan.

Senator Christopher S. Bond, Republican of Missouri, then requested that the Senate consider a compromise measure that would speed access to $25 billion in federally subsidized loans that have been signed into law by President Bush. Those loans, however, were meant to help the auto companies retool their plants to make fuel-efficient vehicles, so Mr. Reid objected to that.

In an interview on Wednesday evening in his Washington office, Rick Wagoner, the chief executive of General Motors, the most imperiled of the auto companies, struggled to remain upbeat after two days of grueling testimony. Lawmakers had criticized Mr. Wagoner and the two other chief executives for failing long ago to build better cars or to revamp their operations. They were even attacked for traveling to Washington in corporate jets, which some lawmakers mocked as hardly a sign of frugality.

“This is all part of what we signed up for when we made this request,” Mr. Wagoner said, seeming drained and uncertain of what would come next. “We knew we needed to testify and come down and tell our story, and we know the Congress needs to decide if it’s going to act and how it’s going to act. We don’t think realistically one should have expected an answer tonight, and I still remain hopeful.”

But with the House set to adjourn at the end of Thursday, the automakers were left with only the dimmest of hopes that Congress would provide any assistance this year.

And though Mr. Reid did not completely close the door to a deal, House Speaker Nancy Pelosi has repeatedly expressed strong opposition to the core of Mr. Bond’s proposal.

In a sign of the pessimism among Congressional Democrats, the majority leader, Steny H. Hoyer of Maryland, told lawmakers on Wednesday evening that no House votes were expected Thursday, meaning the Senate was not expected to send over any legislation for approval.

Mr. Wagoner met with Congressional leaders late Wednesday before leaving for Detroit, and while he declined to say if he expected some last-minute aid package, he said G.M. would welcome any form of assistance.

“I think it best we leave what’s the best way to do this to the Congressional leaders and to the administration to sort out,” he said. “We’d be happy to work under any of the scenarios I’ve been told about.”

Mr. Wagoner testified Wednesday that G.M. had not prepared a contingency plan for a bankruptcy filing if federal aid is not forthcoming. He said t G.M.’s advisers had concluded that it could not obtain credit to operate in a bankruptcy, and instead would have to consider liquidating its assets.

The auto industry’s immediate future may now lie with the Bush administration, which has staunchly opposed using the Treasury Department’s $700 billion financial bailout program to aid Detroit. Democrats continued to insist Wednesday that the Treasury secretary, Henry M. Paulson Jr., has legal authority to tap the fund and should do so.

“I talked to Secretary Paulson twice today; he knows he has authority,” Mr. Reid said on the Senate floor. “He doesn’t want to do it.”

Mr. Bond, whose state houses factories for all of the Big Three, pressed Mr. Reid to consider an alternative plan that he and Senator George V. Voinovich of Ohio had been developing in consultation with Senator Carl Levin, Democrat of Michigan.

“This is a critical time to move to prevent perhaps the bankruptcy or disappearance of a major auto company, which would cause chaos in our country,” Mr. Bond said. “Over three million jobs are related to the auto industry, from the auto assembly plants to the auto dealerships, parts suppliers.”

But Mr. Reid said it was too soon to put it to a vote. “We’ve had no hearings. We have no text,” he said. “I know that my friend Senator Bond is a man of faith. I think I am, too. But this is carrying it a little too far. We don’t know anything about this. I look forward to a piece of legislation that we can look at. Hopefully, it can be done tonight or tomorrow and we’ll look at it.”

He added: “But I want everyone to understand no matter how hard we work, how hard we try, the House of Representatives is going home tomorrow. O.K.? They’re leaving.”

If Congress adjourns without approving any aid and the Bush administration refuses to act, the automakers will have to wait until President-elect Barack Obama takes office on Jan. 20, and even then there are no guarantees.

It looks to be a rocky ride for the Big Three until then. G.M., for example, is using more than $2 billion in cash a month and may run short of the minimal level needed to operate by then.

Already, the blame game has begun. At the White House, the press secretary, Dana Perino, said Wednesday that the administration supported Mr. Bond’s proposal and chastised Mr. Reid for not holding a vote on it.

She said that if Congress leaves town without addressing the automakers’ plight, “then the Congress will bear responsibility for anything that happens in the next couple of months during their long vacation."

Mr. Wagoner, in the interview, declined to say whether G.M. would be insolvent by the time the new administration comes in.

“Everybody is working like crazy to come up with additional cost savings. We’re going to do everything we can no matter what,” he said. “But the reason we’re down here now is we do think the time is urgent and the risk is high. We think it’s very high risk not to act now.”

In testimony on Wednesday before the House Financial Services Committee, Mr. Wagoner and his counterpart at Chrysler, Robert L. Nardelli, said it was unlikely that their companies could survive much longer without emergency assistance.

The chief executive of Ford Motor, Alan R. Mulally, said his company had enough cash to last through 2009 but that a failure by G.M. or Chrysler could have catastrophic effects on the industry.

The four-hour hearing before the House committee raised many of the same concerns that were aired Tuesday’s hearing by the Senate Banking Committee.

Republicans attacked the automakers for failing to fix their business models until they were on the verge of disaster.

“A bailout, to me, raises fairness issues and does not solve the problem,” said Spencer Bachus of Alabama, the senior Republican on the committee.

Jeb Hensarling, Republican of Texas, was among the skeptics. “I need to be convinced that if you get the $25 billion that it will actually make a difference.”

Liz Robbins contributed reporting.

    Auto Chiefs Fail to Get Bailout Aid, NYT, 20.11.2008, http://www.nytimes.com/2008/11/20/business/20auto.html

2 Close House Races Decided; 4 Still Up in Air

November 8, 2008
Filed at 2:41 a.m. ET
The New York Times
By THE ASSOCIATED PRESS

ANNAPOLIS, Md. (AP) -- The Democrats have gained another foot soldier in Congress: Democrat Frank Kratovil has won an open seat in the U.S. House from Maryland's 1st District.

He claimed a seat held for 18 years by the GOP, beating Republican Andy Harris by about 2,000 votes.

Meanwhile in Washington state's 8th Congressional District, Republican U.S. Rep. Dave Reichert (RY-kert) has beaten back a challenge from Democrat Darcy Burner for a second time. With 80 percent of the vote counted Reichert leads by 8,000 votes, 51 percent to 49. Burner conceded Friday night.

The victories give Democrats some 256 House seats, to 175 for the GOP. Democrats have picked up 20 seats. Four House races -- in Alaska, California, Virginia and Ohio -- are still too close to call.

    2 Close House Races Decided; 4 Still Up in Air, NYT, 8.11.2008, http://www.nytimes.com/aponline/washington/AP-US-House-Close-Races.html

Democrats Vow to Pursue an Aggressive Agenda

November 6, 2008
The New York Times
By DAVID M. HERSZENHORN and CARL HULSE

WASHINGTON — Flush with victory built on incursions in the South and West, Congressional Democratic leaders promised to use their new power to join President-elect Barack Obama in pursuing an aggressive agenda that puts top priority on the economy, health care, energy and ending the Iraq war.

By reaching deep into traditionally Republican turf, the Democrats in Tuesday’s elections expanded their majorities in both the House and the Senate. They picked up at least five Senate seats, in Colorado, New Hampshire, New Mexico, North Carolina and Virginia. And they picked up at least 19 House seats, with new Democrats coming from Alabama, Arizona, Colorado, Nevada, New Mexico, North Carolina and Virginia.

The full extent of the new Democratic majorities remained unknown, with tight Senate races still undecided in Alaska, Minnesota and Oregon and a runoff scheduled on Dec. 2 in Georgia. At least six House races remained too close to call.

Still, the promise of strong control of Congress also left Democratic leaders grappling with challenges of balancing a wider spectrum of views within their own party while confronting a diminished House Republican conference now decidedly more conservative.

The exuberance of Tuesday night’s victories was also tempered by unease over the public’s high expectations for a party in control of both Congress and the White House amid economic turmoil, two wars overseas and a yawning budget gap.

On the day after the election, leadership battles were breaking out across Capitol Hill as lawmakers contemplated the prospects of new power and opportunity. The quick start to the skirmishing signaled that some of the more bitter fights in the next Congress could be internal battles among Democrats.

For instance, Democratic aides said that Representative Henry A. Waxman of California was expected to challenge Representative John D. Dingell of Michigan, the longest-serving House Democrat, for chairmanship of the Energy and Commerce Committee. Energy issues are expected to be a major focus of the Obama administration.

And before the week is out, Democrats could try to oust Senator Joseph I. Lieberman of Connecticut, the independent who campaigned for Senator John McCain, from the chairmanship of the Homeland Security and Governmental Affairs Committee.

Speaker Nancy Pelosi, who spoke with Mr. Obama by phone on Wednesday morning, said that they had made plans to discuss coordinated efforts for the transition and the new Congress, but that a more ambitious agenda would unfold next year.

“Our priorities have tracked the Obama campaign priorities for a very long time,” Ms. Pelosi said at a news conference where she cited the economy, health care, energy and the Iraq war as topping the agenda.

She said Democrats were talking with the Bush White House about a potential $61 billion economic stimulus that could be approved in a lame-duck session.

But Ms. Pelosi said Democrats could open the 111th Congress in January with efforts to adopt measures blocked by President Bush, including ones to expand the State Children’s Health Insurance Program and embryonic stem cell research. She said Democrats had no choice but to chart a centrist course. “The country must be governed from the middle,” she said. But Democrats on both sides of the Capitol were just beginning to digest the new faces in their expanded caucuses.

Those new members include Jim Himes, a Harvard- and Oxford-educated former Goldman Sachs banker turned affordable-housing advocate who ousted Representative Christopher Shays of Connecticut, the only Republican House member in New England.

But even as Democrats tightened their grip on the traditionally liberal Northeast, roughly one-third of this year’s gains in the House came in the West, including two seats in New Mexico and one each in Arizona, Colorado, Idaho and Nevada.

In Idaho, the Democrats scored an unlikely House victory when Walt Minnick, a self-described “gun-owning outdoorsman” who once worked in the administration of Richard M. Nixon defeated Bill Sali, a Republican incumbent.

Mr. Minnick, who emphasized his résumé as a businessman and longtime executive in the lumber industry, will join a Democratic conference long dominated by urban liberals and led by Ms. Pelosi, of San Francisco.

The Senate majority leader, Harry Reid of Nevada, and other Democrats pointed to their successes in the West as evidence that they were building an enduring majority. They said new lawmakers from the region would bring a pragmatic approach driven less by partisanship and more by common sense.

Representative Tom Udall, a Democrat who won a Republican-held Senate seat in New Mexico, said, “I feel like I am coming in as a Western problem-solver, as somebody who has had success working across the aisle on many issues in my home state.” Mr. Udall’s cousin Representative Mark Udall won the Senate race in Colorado.

Gov. Brian Schweitzer of Montana, a Democrat who won a second term on Tuesday, said the results showed that Republicans no longer had a guaranteed hold on the West. “When Democrats win in Idaho, that means that there is not a single place that’s safe left anywhere,” Mr. Schweitzer said.

New Mexico was a showcase of Democratic strength in this election, partly because of strong support from Hispanics, as the party won a Senate seat and two more House seats, turning the state’s Congressional delegation thoroughly blue.

But even as Mr. Reid was crowing about gun-loving Democrats in the West, Senator Sherrod Brown, Democrat of Ohio, was part of a separate conference call focusing on how many Democrats won by embracing progressive economic policies.

Mr. Brown said that he expected Republicans and more conservative Democrats to join an array of legislation related to alternative energy, trade, jobs and tax policy. “With a popular president leading,” he said, “we are going to see all but the most closed-minded Republicans joining us.”

The Senate Republican leader, Mitch McConnell of Kentucky, issued a statement on Wednesday offering Mr. Obama cooperation.

Representative Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee, said he believed that the new House majority would coalesce on most major economic issues but that some disagreements were inevitable.

“Clearly we are a big-tent party, and when it comes to social issues there will be some different perspectives in the caucus,” Mr. Van Hollen said.

Although Democrats fell short of their goal of a 60-vote Senate majority, which would have given them the power to break filibusters, Ms. Pelosi said it would be far easier to get Republican support for Democratic bills with Mr. Bush out of office. She said Republicans often blocked bills to protect the president.

House and Senate Democrats said they believed the Obama administration and Congressional Democrats could mesh in a way that Capitol Hill Democrats and the Carter and Clinton administrations could not. As senators, Mr. Obama and Vice President-elect Joseph R. Biden Jr., built strong relationships on Capitol Hill.

President Jimmy Carter and President Bill Clinton, as former governors, were outsiders to Congress.

Republicans are already warning that Mr. Obama, a relatively junior lawmaker, will be outmaneuvered by more experienced operators on Capitol Hill, a proposition Democrats dismissed, noting that Mr. Obama would benefit from the counsel of Mr. Biden, a longtime senator from Delaware. “I think both sides realize we need one another and both sides realize that we better not blow this,” said Senator Charles E. Schumer of New York.

    Democrats Vow to Pursue an Aggressive Agenda, NYT, 6.11.2008, http://www.nytimes.com/2008/11/06/us/politics/06cong.html?hp

Democrats Head for Bigger House Majority

November 4, 2008
Filed at 1:01 p.m. ET
The New York Times
By THE ASSOCIATED PRESS

WASHINGTON (AP) -- The Democratic lawmaker in charge of increasing the party's majority in the House says he's confident of solid gains, even though there has been a tightening in several races.

Maryland Rep. Chris Van Hollen says he's cautious because so many House races are being fought in GOP-leaning districts, so he's not predicting the 20-plus seat gains that others see. Van Hollen says that a 10 to 15 seat gain would be a solid win.

He says to expect a big night for Democrats if they pick up a GOP seat in Indiana, where polls close at 7 p.m.

But if endangered Democratic incumbents lose battles in Pennsylvania and New Hampshire, Democratic gains would be more limited.

All 435 House seats are up for grabs tonight. Democrats currently hold a 36-seat edge.

    Democrats Head for Bigger House Majority, NYT, 4.11.2008, http://www.nytimes.com/aponline/washington/AP-House-Rdp.html

Republicans Scrambling to Save Seats in Congress

November 3, 2008
The New York Times
By CARL HULSE

WASHINGTON — Outspent and under siege in a hostile political climate, Congressional Republicans scrambled this weekend to save embattled incumbents in an effort to hold down expected Democratic gains in the House and Senate on Tuesday.

With the election imminent, Senate Republicans threw their remaining resources into protecting endangered lawmakers in Georgia, Minnesota, Mississippi, New Hampshire, North Carolina and Oregon, while House Republicans were forced to put money into what should be secure Republican territory in Idaho, Indiana, Kentucky, Virginia and Wyoming.

Sensing an extraordinary opportunity to expand their numbers in both the House and Senate, Democrats were spending freely on television advertising across the campaign map. Senate Democrats were active in nine states where Republicans are running for re-election; House Democrats, meanwhile, bought advertising in 63 districts, twice the number of districts where Republicans bought advertisements and helped candidates.

“We are deep in the red areas,” Representative Chris Van Hollen of Maryland, chairman of the Democratic Congressional Campaign Committee, said on Sunday. “We are competing now in districts George Bush carried by large margins in 2004.”

What seems especially striking about this year’s Congressional races is that Democrats appear to have solidified their gains from the 2006 midterm elections and are pushing beyond their traditional urban turf into what once were safe Republican strongholds, creating a struggle for the suburbs.

Trying to capitalize on economic uncertainty, House Democrats are taking aim at vacant seats and incumbents in suburban and even more outlying areas — the traditional foundation of Republican power in the House. With many of the most contested House races occurring in Republican-held districts that extend beyond cities in states like Florida, Michigan, Minnesota and Ohio, Democrats said expected victories would give them suburban dominance.

The same is true for Senate Democratic candidates, who are seeking to nail down swing counties outside urban centers and move the party toward a 60-vote majority. That majority could overcome a filibuster, if party leaders could hold the votes together.

Among open House seats Democrats say they have a good chance of capturing include those being vacated by Representatives Ralph Regula and Deborah Pryce in Ohio, Jim Ramstad in Minnesota, Jerry Weller in Illinois and Rick Renzi in Arizona.

On the list of incumbents Democrats believe they can defeat are Representatives John R. Kuhl Jr. in New York, Joe Knollenberg in Michigan, Tom Feeney and Ric Keller in Florida, Don Young in Alaska, Robin Hayes in North Carolina and Bill Sali in Idaho.

Democrats say they have been able to peel away suburbanites by emphasizing Republican culpability for the economic decline, a point they say House Republicans helped make themselves by initially balking at the $700 billion bailout and sending the markets into a tailspin that depleted retirement and college savings accounts.

“Suburban voters are angry that their quality of life and standard of living is under attack,” said Representative Rahm Emanuel of Illinois, chairman of the House Democratic Caucus and a leading advocate of Democrats trying to broaden their appeal in the suburbs.

The partisan spending gap was stark. As of last week, Senate Democrats had spent more than $67 million against Republican candidates, compared with $33.7 million in advertising by Republicans. In the House, the Democratic Congressional Campaign Committee had spent $73 million, compared with just over $20 million for the National Republican Congressional Committee, according to campaign finance reports.

Most of the House Republican money was spent on behalf of incumbents or in districts where a Republican is retiring, emphasizing how much the party was playing defense. By contrast, House Democrats spent most of their money in the last month going after Republican seats in Colorado, Nebraska, Washington, West Virginia and elsewhere. On Sunday, Democrats prepared one last radio advertisement to begin running Monday in an effort to claim the seat of Thomas M. Reynolds, a Republican retiring from his upstate New York district near Buffalo.

“That kind of says it all,” said Representative Thomas M. Davis III, a retiring Virginia Republican whose own suburban seat is likely to go Democratic on Tuesday. Mr. Davis said Republicans simply faced too many disadvantages heading into Election Day, including a higher number of retirements in the House and Senate, an unpopular president and an economic collapse.

“You like to see a fair fight,” said Mr. Davis, a former chairman of the Republican Congressional campaign committee, “but basically we are playing basketball in our street shoes and long pants, and the Democrats have on their uniforms and Chuck Taylors.”

Neither of the national Senate campaign arms was advertising in Colorado, New Mexico or Virginia, indicating that Republicans were virtually ceding those states, where members of their party are retiring, to the Democrats. Senate Democrats were also optimistic about the prospects of unseating Senator John E. Sununu in New Hampshire and Senator Ted Stevens in Alaska, where Mr. Stevens campaigned despite being newly convicted on felony ethics charges.

Democrats said they saw themselves with the advantage in Minnesota, North Carolina and Oregon, giving them a reasonable chance at claiming eight seats and enlarging their Senate majority to 59 if they hold their current seats.

If Democrats swept those races, it could leave the potential 60th vote to break filibusters resting on the outcome in Georgia, Mississippi or Kentucky, where Senator Mitch McConnell, the Republican leader, is in a competitive race with Bruce Lunsford, a businessman. Polls show Democrats trailing but within striking distance in all three races, with the final results potentially hinging on the presidential race and turnout among Democratically inclined black voters.

In Mississippi, which has not sent a freshman Democrat to the Senate since John C. Stennis was elected in 1947, Senator Roger Wicker, a Republican appointed last year to fill the seat left vacant by Trent Lott’s resignation, is in a tight race with former Gov. Ronnie Musgrove, a Democrat.

“We feel we have a lot of momentum,” said Senator Charles E. Schumer of New York, chairman of the Democratic Senatorial Campaign Committee, “but we are ever mindful that getting to 60 is an extremely difficult thing to do because we are in so many red states.”

Republicans privately acknowledged that there was little hope for some of their candidates, including Senator Elizabeth Dole of North Carolina. But Republicans have not given up on the idea of unseating Senator Mary L. Landrieu in Louisiana, a state where Senator John McCain was running well against Senator Barack Obama in the presidential race. A victory over Ms. Landrieu by John Kennedy, the state treasurer, would be a significant moral victory for Republicans, and they pointed to internal polls that show a close race.

In Louisiana, North Carolina and Oregon, Republicans were trying to energize voters with the threat of Democratic dominance in Washington, running advertisements that warn voters about “complete liberal control of government.”

“We agree with Chuck Schumer that this is a tectonic election,” said Rebecca Fisher, spokeswoman for the National Republican Senatorial Committee. “And if Democrats get their way, this country will shift so far left it will take generations to get back on track.”

Both parties were focusing substantial final energies on the Senate race in Minnesota, where Senator Norm Coleman, the Republican, was in a heated clash with his Democratic challenger, Al Franken, a former comedian and radio talk show host.

The race remained close as Mr. Coleman was named in a last-minute lawsuit in Texas alleging that a businessman had funneled $75,000 to him through his wife’s business. Mr. Coleman, who has filed an unfair campaign practices complaint accusing Mr. Franken of broadcasting falsehoods in his advertisements, denied any impropriety, but the lawsuit led to a flurry of news accounts only days before the election.

In Kentucky, Mr. McConnell enlisted hundreds of volunteers to knock on doors and to make phone calls in the remaining hours. He was to embark on a fly-around of the state’s cities Monday in his effort to repel the serious challenge from Mr. Lunsford, who brought in one of Kentucky’s favorite daughters, the actress Ashley Judd, to campaign on his behalf in the closing days.

Strategists for both parties said it seemed increasingly possible that the full Senate picture might not even be settled Tuesday, given that a third-party candidate could cause both Senator Saxby Chambliss, Republican of Georgia, and his Democratic opponent, Jim Martin, to fall short of 50 percent of the vote, forcing a runoff on Dec. 2.

Party operatives also warned that Tuesday was likely to produce some surprises, considering the strong resentment toward Congress that has been reflected in polls for months. They predicted upsets of some House incumbents not thought to be in trouble.

Republicans said they believed some top Democratic targets, like Representative Dave Reichert of Washington and Christopher Shays of Connecticut, would be able to hang on because they, and others, had run strong campaigns built on their individual images and records.

“Republican candidates who have established their own personal brand, and have framed their respective races around creating a clear choice, will succeed on Election Day despite the turbulent political environment,” said Ken Spain, a spokesman for the National Republican Congressional Committee.

One problem for House Republicans was that freshmen lawmakers who gave Democrats control of the House after the 2006 elections were faring much better than party leaders had expected. Some, like Representative Kirsten Gillibrand, who represents the Hudson Valley in New York, became prime Republican targets virtually from the moment they were elected but are now favored to win second terms after raising formidable sums of money and cultivating moderate voting records that insulated them from attack.

Representative John Yarmuth of Kentucky, the president of the Democrats’ 2006 freshman class, said only two of its members were in serious trouble: Representative Nick Lampson of Texas, who represents a heavily Republican district south of Houston, and Representative Tim Mahoney of Florida, who has been entangled in a scandal over extramarital affairs.

Mr. Yarmuth credited House Democratic leaders with pursuing an agenda that gave the freshmen substantial achievements to promote back home, especially a generous new education benefit for veterans that counterbalanced the Democrats’ opposition to the war in Iraq

“I think that was a trademark of this last Congress that created a moderate image that we were pro-military, pro-troops,” Mr. Yarmuth said.

David M. Herszenhorn contributed reporting.

    Republicans Scrambling to Save Seats in Congress, NYT, 3.11.2008, http://www.nytimes.com/2008/11/03/us/politics/03cong.html?hp

Voter 'anger' has Dems set for big gains in Congress

26 October 2008
USA Today
By John Fritze

WASHINGTON — Out of money and down by double digits in the polls a month ago, Georgia Democrat Jim Martin's campaign for U.S. Senate was all but dead. Now, those polls show, it's dead even.

The race for the Georgia Senate seat should have been as comforting as peach cobbler for Republicans, but this month the non-partisan Cook Political Report changed its outlook for Sen. Saxby Chambliss' re-election from a safe bet to a tossup.

"The mood across the country is not particularly good right now," says Chambliss, a first-term senator who adds that he suspected the early lead wouldn't stick. "We knew it was going to be very close."

An unpopular president, fundraising doldrums and the burden of defending 27 more open seats than the Democrats are factors forcing GOP leaders to play defense in congressional races across the USA, as the Democrats angle for even wider majorities. Open seats do not have an incumbent.

Democrats have a 38-seat advantage in Congress now and, despite their own low approval ratings, the party could add as many as 28 seats in the House and seven to nine in the Senate, according to Cook.

As late as September, many Republicans thought the energy created by vice presidential pick Sarah Palin and the party's populist response of drilling to reduce gas prices could stem the losses.

But that was before the economic meltdown sent financial markets — and GOP poll numbers — tumbling as Americans linked the downturn to the Bush White House.

Even once-safe Republican seats — such as in North Carolina where Sen. Elizabeth Dole faces Democrat Kay Hagan — have become the focus of tight races.

In Minnesota, Republican Sen. Norm Coleman is in a contentious contest with Democrat Al Franken, the writer and comedian. Others, such as Chambliss and Senate Minority Leader Mitch McConnell, R-Ky., still have leads, but narrow ones.

Democrats seized control of Congress in 2006, picking up 36 seats. Usually when a party wins big one year it has to defend the gains in the next election, notes Rep. Rahm Emanuel, D-Ill.

This year, however, polls indicate Democrats are en route to bucking that trend.

"Republicans are still hung over from 2006, and they're about to get kicked in the gut again," says David Wasserman, who tracks House races for Cook.

"Voters are intent on taking out their anger on the party they perceive to have mishandled the economy."

Battling for open seats

Northern Virginia sent Republican Rep. Tom Davis to Congress for 14 years. This year, Davis is retiring, and his voters are flirting with a Democrat.

"The district is turning bluer by the hour," says Democratic candidate Gerry Connolly, who faces Republican Keith Fimian for Davis' seat. "The Republican label is a tough label this year."

The race, which Cook predicts is likely to go Connolly's way, illustrates a major problem Republicans face: a high number of hard-to-defend seats left open by retirements.

Republicans are leaving open five Senate seats; Democrats, one. In the House, 29 Republican seats are open, and Cook predicts 16 of those are in jeopardy of going Democratic.

Six Democratic seats are vacant in the House, but the GOP appears to have a shot at winning just one, in northern Alabama.

Defending an open seat is harder, in part because challengers lack the visibility and fundraising muscle that come with elected office. In 2006, 94% of House incumbents and 79% of senators won re-election, according to the non-partisan Center for Responsive Politics.

Open seats also cost more to win.

First-time winners in open House races two years ago spent an average $700,000 more than successful incumbents, the center reports. This year, polls show Democrats ahead for open Republican Senate seats in Virginia, New Mexico and Colorado.

"People really do want change," says Democratic Rep. Mark Udall, who the non-partisan Rothenberg Political Report forecasts to win the Colorado Senate seat being vacated by Republican Sen. Wayne Allard.

Hoping to defy conventional wisdom, Republicans are pressing on. In Northern Virginia, Fimian says he believes his race against Connolly will be closer than predicted.

"The more people I get in front of, the better my chances," he says.

Republican Bob Schaffer, who is trailing Udall in Colorado's Senate race, says his polling shows 10% of voters are undecided. He expects many of those voters to break his way Election Day.

"People are making their minds up that the economy and pocketbook issues are the driving force behind their decision-making," says Schaffer, a former energy executive who describes himself as the low-tax candidate.

"If this race is about the economy, I'm going to win."

Like many Republican candidates, Schaffer acknowledges Democrats will pick up seats. But, he says, "we don't intend for it to be in Colorado."

For Democrats, the challenge is different.

They need to defend incumbents who won in Republican-leaning districts two years ago. Four freshmen House Democrats are in races Cook calls tossups.

Democrats boost spending

Democrat Larry Kissell, a North Carolina social studies teacher who has never held public office, came within 329 votes of Republican Rep. Robin Hayes in 2006.

This year, Kissell's party isn't taking any chances.

The Democratic Party's national fundraising arm is helping Kissell overcome his financial disadvantage by pumping $1.7 million into his campaign — one of the biggest infusions of party support in the nation.

"The money itself controls the volume knob on a lot of things," Kissell spokesman Thomas Thacker says.

Outside cash has paid for TV ads that link Hayes to President Bush.

"Robin Hayes must have his head in the clouds," the narrator of one ad says as a picture of Hayes floats in the sky. "He seems to think George Bush's economic policy is working."

The party that controls Congress typically has an advantage in fundraising. So far in this general election, Democratic candidates have spent 29% more than Republicans — a reversal from 2006, when Republicans outspent Democrats, according to the center's analysis.

The Democratic Congressional Campaign Committee (DCCC) has spent $52 million on "independent expenditures" to help its candidates, according to the congressional newspaper Roll Call.

By contrast, the National Republican Congressional Committee has spent $12 million.

"The fact the DCCC is bankrolling this race is very telling that Larry Kissell needs Washington to run this race for him," Hayes said in a statement.

"The effect is that the voters are being bombarded with negative attacks that come from Washington, D.C."

Democrats poured $1.5 million into central Arizona's 3rd District, where Democrat Bob Lord is running against seven-term Republican Rep. John Shadegg.

And in Ohio's 15th District, the Democratic Party has spent $1.5 million to back Mary Jo Kilroy, who is seeking an open seat.

"Democrats are more energized, organized and well-funded than the Republicans," says Nathan Gonzales, political editor at Rothenberg.

"Republicans either don't have the money to respond in some districts or can't respond at the same levels."

'Blame the Republicans'

As bad as the political climate was for Republicans during the summer, it got worse in September when the financial crisis forced the Bush administration to ask Congress for a $700 billion bailout of Wall Street.

Incumbents in both parties said they received thousands of phone calls from constituents angry that the government would consider using taxpayer money to bail out private institutions. Many members in tight elections voted against the measure.

Sen. Gordon Smith, R-Ore., supported the bill and came under fire from his Democratic opponent, Oregon House Speaker Jeff Merkley, who called it "incredibly fiscally irresponsible."

The two are locked in a tight race that Congressional Quarterly says has no clear favorite.

"It goes right to the heart of Gordon Smith's view that you let the big boys do what they want, this willingness to put your hands over your eyes," says Merkley, who aired a TV ad criticizing Smith over the bailout just before Congress approved it.

Smith's campaign manager, Brooks Kochvar, argues that Merkley's message is not resonating.

"Sen. Gordon Smith faced a decision to do something, though not perfect, to help Main Street, or to do nothing at all," Kochvar says. "Our opponent's message is to do nothing at all."

Anger over the economy is likely to hurt Republican incumbents no matter how they voted on the bailout, says David Rohde, a political science professor at Duke University.

That resentment explains the Democrats' momentum, he says.

"The negative perceptions of Bush and the Republican administration have spilled over to Republicans more generally in Congress," he says.

"Here, more than anywhere, people tend to blame the Republicans because they blame Wall Street."

Turnout may change the game

Another factor that could drive House and Senate races has nothing to do with the congressional candidates: turnout in the historic presidential race.

Nearly 590,000 new voters have registered in Georgia in the past year, for instance, and both Senate candidates there say they are watching the effect Democratic presidential nominee Barack Obama's candidacy may have on black voters, who tend to choose Democrats.

Most polls have given Republican presidential nominee John McCain a slight lead in Georgia, which could help Chambliss.

So far, however, African Americans are casting a disproportionately high number of early voting ballots. Black turnout for Obama also could affect congressional races in North Carolina and Mississippi.

"Our challenge is for those first-time voters who are coming out to say 'I want to vote for Barack Obama for president' is to make sure they stay in the booth long enough and vote for the congressional candidates," says Rep. Chris Van Hollen, D-Md., chairman of the DCCC.

Davis, a former chairman of the National Republican Campaign Committee, says high voter registration does not necessarily translate into turnout on Election Day.

"But there is no question that there is going to be an enhanced African-American turnout in this," he says.

"They are unlikely to vote for Obama and come back in significant numbers for Republicans at the congressional level."

Martin, the Democratic Senate candidate in Georgia, says it is not just an increase in black voters that will shape the election.

"People are coming from all different sectors of our society to exercise their rights as citizens to vote," he says.

"They're demanding change, and they're participating in numbers that we've not seen in many, many years."

    Voter 'anger' has Dems set for big gains in Congress, UT, 26.10.2008, http://www.usatoday.com/news/politics/election2008/2008-10-26-congress_N.htm

Democrats Headed Toward Big Gains in House, Senate

October 25, 2008
Filed at 4:21 a.m. ET
By THE ASSOCIATED PRESS
The New York Times

WASHINGTON (AP) -- Democrats are on track for sizable gains in both houses of Congress on Nov. 4, according to strategists in both parties, although only improbable Southern victories can produce the 60-vote Senate majority they covet to help them pass priority legislation.

A poor economy, President Bush's unpopularity, a lopsided advantage in fundraising and Barack Obama's robust organizational effort in key states are all aiding Democrats in the final days of the congressional campaign.

''I don't think anybody realized it was going to be this tough'' for Republicans, Sen. John Ensign, chairman of the party's senatorial campaign committee said recently. ''We're dealing with an unpopular president (and) we have a financial crisis,'' he added.

''You've got Republican incumbent members of the Congress'' trying to run away from Bush's economic policies, said Maryland Rep. Chris Van Hollen, who chairs the House Democratic campaign committee. ''And they can't run fast enough. I think it will catch up with many of them.''

Speaker Nancy Pelosi of California predicted recently that Democrats would win at least 14 House seats in Republican hands.

But numerous strategists in both parties agreed a gain of at least 20 seems likely and a dozen or more GOP-held seats are in doubt. Only a handful of Democratic House seats appear in any sort of jeopardy. They spoke only on condition of anonymity, saying they were relying on confidential polling data.

In the Senate, as in the House, only the magnitude of the Democratic gains is in doubt.

New York Sen. Chuck Schumer, head of the Democratic committee, said his party would have to win seats in ''deeply red states'' to amass a 60-seat majority, but added, ''We're close.''

Obama's methodical voter registration efforts in the primary season and his current get-out-the-vote efforts are aiding Democratic candidates in several Southern races. They start with North Carolina, where GOP Sen. Elizabeth Dole trails in the polls, and include Georgia and Mississippi, where Sens. Saxby Chambliss and Roger Wicker respectively are in unexpectedly close races.

''Overall, I think Obama will help us in the South because, first, his economic message resonates with Southerners, both white and black, and obviously there will be an increased African-American turnout,'' Schumer said.

Also in a close race is the Republican leader, Sen. Mitch McConnell of Kentucky, although that is not a state where Obama has made much of an effort.

Compounding Republican woes, the same economy that has soured voters on their candidates is causing some of the nation's wealthiest conservative donors to stay on the campaign sidelines.

Freedom's Watch, a conservative group that once looked poised to spend tens of millions of dollars to help elect Republicans, had spent roughly $3 million as of midweek. Its largest single contributor is Sheldon Adelson, a billionaire with gambling interests in the United States and China.

Democrats hold a 51-49 majority in the current Senate, counting two independents who vote with them. In the House, Democrats have 235 seats to 199 for Republicans, with one vacancy.

It has long been apparent that Democrats would retain control of both houses of Congress, and in recent weeks, the party's leaders have mounted a concerted drive to push their Senate majority to 60. That's the number needed to overcome a filibuster, the technique of killing legislation by preventing a final vote. If Obama were to win the White House, it would be the Republicans' last toehold in power.

In reality, Ensign noted this week that even if Democrats merely draw close to 60 seats, they will find it easier to pick up a Republican or two on individual bills and move ahead with portions of their agenda that might otherwise be stalled.

Democrats are overwhelmingly favored to pick up seats in Virginia, New Mexico and Colorado where Republicans are retiring.

Additionally, GOP Sens. John Sununu of New Hampshire, Norm Coleman of Minnesota and Gordon Smith of Oregon are in jeopardy. So, too, Alaska Sen. Ted Stevens, whose fate may rest on the outcome of his corruption trial, now in the hands of a jury in a courthouse a few blocks from the Capitol.

Even if they win all four of those races -- a tall order -- Democrats would be two seats shy of 60 and looking South to get them.

In the House, Democrats are so flush with cash that they have spent nearly $1 million to capture a seat centered on Maryland's Eastern Shore that has been in Republican hands for two decades.

It is one of 27 races where the Democratic Congressional Campaign Committee has spent $1 million or more -- a total that the counterpart Republican group has yet to match anywhere.

''We've had to hold most of our resources for the final two weeks and that's beginning to make a difference,'' said Rep. Tom Cole of Oklahoma, chairman of the GOP House committee.

Cole declined to make an overall prediction. ''A lot depends on what happens presidentially in the next 10 days. We're very closely tied with John McCain and we got a lot of open seats and a strong financial disadvantage,'' he said. He predicted the party's Republican presidential candidate would mount a strong finish and help other candidates on the ballot.

Still, the party's campaign committee recently pulled back from plans to advertise on behalf of incumbents in Michigan, Florida, Colorado and Minnesota who face competitive challenges.

For its part, the Democratic Congressional Campaign Committee recently invested in a race in the Lincoln, Neb., area held by Republican Rep. Lee Terry. Obama has a dozen or more paid staff as well as volunteers there hoping to win one electoral vote.

Democrats express confidence they will pick up at least two and possibly three Republican-held New York seats where incumbents decided against running again and at least one each in Illinois, Virginia, Ohio, New Mexico and Arizona. There are additional opportunities in at least a half-dozen other states.

Republican incumbents in greatest jeopardy include Reps. Don Young in Alaska, Tom Feeney and Ric Keller in Florida, Joe Knollenberg and Tim Walberg in Michigan, Marilyn Musgrave in Colorado, Jon Porter in Nevada and Robin Hayes in North Carolina.

Among the few Democrats in close races are Reps. Nick Lampson in Texas, who is in a solidly Republican district; Tim Mahoney in Florida, who recently admitted to having two extramarital affairs; Carol Shea-Porter in New Hampshire and Paul Kanjorski in Pennsylvania.

    Democrats Headed Toward Big Gains in House, Senate, NYT, 25.10.2008, http://www.nytimes.com/aponline/washington/AP-Congress-Stakes.html

House Panel Faults Lehman’s Leadership

October 7, 2008
The New York Times
By BEN WHITE and SHARON OTTERMAN

Even as the investment bank Lehman Brothers pleaded for a federal bailout to save it from bankruptcy protection, it approved millions of dollars in bonuses for its departing executives, a Congressional committee was told Monday.

The first Congressional hearing into the causes of the financial crisis began with a portrayal of Lehman Brothers as a firm run by irresponsible leaders who continued to reward executives and spend billions on stock buybacks and other capital-depleting programs even as internal documents warned about the impending crisis.

“It was a company in which there was no accountability for failure,” the chairman of the House Oversight and Governmental Reform Committee, Henry A. Waxman, said in his opening statement.

One Lehman document among thousands reviewed by the House committee showed that four days before the bank filed for bankruptcy protection, Lehman’s compensation committee was asked to grant $20 million in “special payments” for three executives who were leaving, Mr. Waxman said. An e-mail exchange recommending a delay in bonus payments was apparently brushed aside.

Another document showed that executives were warned in a January 2008 meeting that the company was facing liquidity problems. Yet the firm moved forward with capital outlays, including $5 billion in bonuses, $4 billion in shares and $750,000 in dividend payments between 2007 and the firm’s bankruptcy filing on Sept. 15.

An internal analysis conducted by Lehman found that the company did not move early or fast enough to avert the crisis, and concluded that the firm “lacked discipline” in its financial dealings before it filed for bankruptcy, Mr. Waxman said.

“Mr. Fuld takes no responsibility,” Mr. Waxman said of Lehman’s chief executive, Richard S. Fuld Jr. “Instead he cites a litany of destabilizing factors, that led to the company’s collapse.”

“In other words, even as Mr. Fuld was pleading with Secretary Paulson for a federal rescue, Lehman continued to squander millions on executive compensation,” Mr. Waxman said referring to Henry M. Paulson Jr., the Treasury secretary.

In testimony prepared for the hearing, Mr. Fuld said that he had failed to anticipate the severity of the credit crisis and never thought it would crush the investment bank he helped build into a global power.

“With the benefit of hindsight, I can now say that I and many others were wrong,” Mr. Fuld said in the prepared remarks.

Mr. Fuld said the turmoil in the markets was “unprecedented” and became impossible to overcome.

“The problems that most believed would be contained to the mortgage markets have spread to our credit markets, our banking system, and every area of our financial system,” he said. “As incredibly painful as this is for all those connected to or affected by Lehman Brothers — this financial tsunami is much bigger than any one firm or industry.”

Mr. Fuld and other Lehman executives are facing preliminary investigations into whether they made public statements about Lehman that did not match underlying economic reality. He is expected to face questions on that topic when he appears before the House panel.

The committee spent the morning hearing from a panel of experts who largely agreed with Mr. Waxman’s observations that Mr. Fuld and other executives did not take the proper steps to avert the company’s collapse.

“I certainly think they made conscious decisions to take risks that went far beyond the interests of the shareholders,” said Gregory W. Smith, the general counsel of the Colorado Public Employees’ Retirement Association, which had millions invested with the firm. Mr. Smith added that lax regulation and the failure of auditors to report problems at Lehman also hurt investors.

During the hearing, Republicans on the committee called for a more thorough investigation of the role of Congress in the financial crisis, in particular into its role in pushing the mortgage finance giants, Fannie Mae and Freddie Mac, to guarantee billions of home loans to underqualified buyers.

“The reason we haven’t scheduled hearings on these two institutions, and haven’t requested documents from either, is because their demise isn’t someone else’s fault, its ours, and we don’t want to own up to it,” Representative Christopher H. Shays, Republican of Connecticut, said.

Lehman filed for bankruptcy protection last month after the government declined to assist in a rescue. Parts of Lehman that were not included in the bankruptcy filing have now been sold to Barclays, Nomura and private equity groups. The bankrupt entity, which Mr. Fuld still leads, is besieged by creditors who believe they are owed billions and former employees who are not receiving severance packages they were promised.

Perhaps with an eye on questions about his public statements, Mr. Fuld stated in prepared testimony that he said “what I absolutely believed to be true” when he remarked in 2007 that the worst of the credit crisis was behind Lehman.

He attributed some blame to the media in his testimony, saying some coverage “has been sensationalized — based on rumors, speculation, misunderstandings and factual errors.”

Mr. Fuld also noted that the same day Lehman filed for bankruptcy protection, the Federal Reserve eased lending requirements for other investment banks, something executives at Lehman say they believe could have saved the bank had it been done earlier. He also described his efforts to save the company, including by becoming a deposit-taking bank holding company. That effort by Lehman, later executed by Goldman Sachs and Morgan Stanley, was rebuffed by federal officials.

    House Panel Faults Lehman’s Leadership, NYT, 7.10.2008, http://www.nytimes.com/2008/10/07/business/economy/07lehman.html?hp

Lehman Chief Says Turmoil Overwhelmed Bank

October 7, 2008
The New York Times
By BEN WHITE

Richard A. Fuld, chief executive of the bankrupt Lehman Brothers Holdings Inc., plans to tell Congress on Monday that he failed to anticipate the severity of the credit crisis and never thought it would crush the investment bank he helped build into a global power.

“With the benefit of hindsight, I can now say that I and many others were wrong,” Mr. Fuld said in testimony prepared for the House Committee on Oversight and Government Reform, which is holding hearings to examine the causes of the current financial crisis.

Mr. Fuld, whose desperate efforts to save Lehman Brothers failed last month, said the turmoil in the markets was “unprecedented” and became impossible to overcome.

“The problems that most believed would be contained to the mortgage markets have spread to our credit markets, our banking system, and every area of our financial system,” he said. “As incredibly painful as this is for all those connected to or affected by Lehman Brothers — this financial tsunami is much bigger than any one firm or industry.”

Mr. Fuld and other Lehman executives are facing preliminary investigations into whether they made public statements about Lehman that did not match underlying economic reality. He is expected to face questions on that topic when he appears before the House panel.

Lehman filed for bankruptcy protection last month after the government declined to assist in a rescue. Parts of Lehman that were not included in the bankruptcy filing have now been sold to Barclays, Nomura and private equity groups. The bankrupt entity, which Mr. Fuld still leads, is besieged by creditors who believe they are owed billions and former employees who are not receiving severance packages they were promised.

Perhaps with an eye on questions about his public statements, Mr. Fuld stated in prepared testimony that he said “what I absolutely believed to be true” when he remarked in 2007 that the worst of the credit crisis was behind Lehman.

He attributed some blame to the media in his testimony, saying some coverage “has been sensationalized — based on rumors, speculation, misunderstandings and factual errors.”

Mr. Fuld also noted that the same day Lehman filed for bankruptcy protection, the Federal Reserve eased lending requirements for other investment banks, something executives at Lehman believe could have saved the bank had it been done earlier. He also described his efforts to save the company, including by becoming a deposit-taking bank holding company. That effort by Lehman, later executed by Goldman Sachs and Morgan Stanley, was rebuffed by federal officials.

    Lehman Chief Says Turmoil Overwhelmed Bank, NYT, 7.10.2008, http://www.nytimes.com/2008/10/07/business/economy/07lehman.html

Bailout Plan Wins Approval; Democrats Vow Tighter Rules

October 4, 2008
The New York Times
By DAVID M. HERSZENHORN

WASHINGTON — After the House reversed course and gave final approval to the $700 billion economic bailout package, President Bush quickly signed it into law on Friday, authorizing the Treasury to undertake what could become the most expensive government intervention in history.

But even as Mr. Bush declared that the measure would “help prevent the crisis on Wall Street from becoming a crisis in communities across our country,” Congressional Democrats said that it was only a first step and pledged to carry out a sweeping overhaul of the nation’s financial regulatory system.

The final tally in the House was 263 to 171, with 91 Republicans joining 172 Democrats in favor. That was a wider bipartisan majority than vote-counters in both parties had expected, completing a remarkable turnabout from Monday, when the House defeated an earlier version of the bill by 228 to 205.

The financial markets, however, were not enthusiastic. Already weighed down by another round of bleak economic data, including a report showing that 159,000 jobs were lost in September, the Dow fell 157 points to close at 10,325, or nearly 818 points lower than when the week began, before the House’s initial rejection of the bailout.

Some measures of the credit markets improved after the bill was approved, but only modestly. Analysts said it was too soon to tell whether borrowing rates — the interest rates banks charge each other for loans, and a key indicator of the flow of credit — would fall.

The change in course by the House was prompted by fears of a global economic meltdown, and by old-fashioned political inducements added by the Senate: a portfolio of $150 billion in popular tax provisions, including credits for the production of solar, wind and other renewable energy, and an adjustment to spare middle-class families from paying the alternative minimum tax.

In the end, 33 Democrats and 24 Republicans who had voted no on Monday switched sides on Friday to support the plan. Both Mr. Obama and his Republican rival, Senator John McCain, voted for the measure when the Senate approved it on Wednesday, and both hailed Friday’s outcome.

Mr. McCain said that lawmakers had acted “in the best interests of the nation,” while Mr. Obama warned that “a long and difficult road to recovery” might still lie ahead.

In a sign of the urgency surrounding the economic rescue effort, Congressional staff rushed the newly printed legislation into a news conference where Democratic leaders gathered after the vote. Speaker Nancy Pelosi, of California, signed it at 2 p.m., and it was sent to the White House for Mr. Bush’s signature.

Appearing in the Rose Garden, Mr. Bush praised Congress for acting just two weeks after the Treasury secretary, Henry M. Paulson Jr., requested the emergency bailout legislation with a warning that the American economy was at risk of the worst economic collapse since the Depression.

“We have shown the world that the United States will stabilize our financial markets and maintain a leading role in the global economy,” Mr. Bush said.

But it was a hollow victory for the administration, which after long favoring a hands-off approach toward the financial industry has found itself interceding repeatedly this year to avert one calamity after another.

Ms. Pelosi and other Democrats, who expect to widen their majority in Congress in the November elections, said they intended to tighten controls.

“High-fliers on Wall Street will no longer be able to jeopardize that personal economic security of Americans,” Ms. Pelosi said, “because of the bright light of scrutiny, accountability and the attention given under regulatory reform.”

Representative Barney Frank, Democrat of Massachusetts and chairman of the Financial Services Committee, said: “We will be back next year to do some serious surgery on the financial structure.”

The Republican leader, Representative John A. Boehner of Ohio, had urged his colleagues to vote yes. “We know if we do nothing this crisis is likely to worsen and put us in an economic slump the likes of which we have never seen,” he said. “I am going to vote for this bill because I think it’s in the best interests of the American people.”

Opponents of the bailout called it a costly Band-Aid that did not address the core problems in the financial system. “Some things have changed in this bill but taxpayers will still be picking up the tab for Wall Street’s party,” said Representative Marilyn Musgrave, Republican of Colorado. “I am voting against this today because it’s not the best bill. It’s the quickest bill. Taxpayers for generations will pay for our haste and there is no guarantee that they will ever see the benefits.”

Among House Democrats as well as Republicans, many lawmakers facing the toughest challenges for re-election remained in the no column. Those with easier races were more likely to switch.

Many said they agonized over the decision amid a torrent of calls from constituents. Several who switched to yes cited a provision added by the Senate increasing the amount of savings insured by the Federal government to $250,000 per account, from $100,000.

Fears about the economy also motivated support. “Nobody in East Tennessee hates the fact more than me that I am going to vote yes today after voting no on Monday,” Representative Zach Wamp, a Republican, said.

“Monday I cast a blue-collar vote for the American people,” he continued. “Today I am going to cast a red, white and blue-collar vote with my hand over my heart for this country, because things are really bad and we don’t have any choice.”

Several Democrats in the Congressional Black Caucus said they were persuaded to support the bill by Mr. Obama.

Representatives Elijah E. Cummings and Donna F. Edwards, both of Maryland, said they had each spoken to Mr. Obama who helped persuade them to support the bill, in part by assuring them that he would work to achieve a goal that Democrats gave up during negotiations: a change in bankruptcy laws to let judges modify first mortgages.

Mr. Obama, speaking in Abington, Pa., said he had urged lawmakers from both parties to “not make the same mistake twice.” But he warned that passage of the measure should be just “the beginning of a long-term rescue plan for our middle class.”

Mr. McCain, speaking in Flagstaff, Ariz., warned that the bill was not perfect and there was more to be done. “It is an outrage that it’s even necessary,” Mr. McCain said. “But we must stop the damage to our economy done by corrupt and incompetent practices on Wall Street and in Washington.” Mr. McCain said he spoke to House Republicans before Friday’s vote and urged them to approve the bill.

Friday’s vote capped an extraordinary two-week final stretch for the 110th Congress. Lawmakers, eager to get home for the fall campaign season, had intended to wrap up by adopting a budget bill to finance government operations through early March.

Instead, after dealing with the budget, they found themselves still in Washington, just five weeks before Election Day, facing the most important vote of the year — the most important vote of their lives, many lawmakers said — and under extreme pressure by the White House, the presidential nominees, and Congressional leaders of both parties to make a quick decision.

Supporters said the bailout was needed to prevent economic collapse; opponents said it was hasty, ill conceived and risked too much taxpayer money to help Wall Street tycoons, while providing no guarantees of success. The rescue plan allows the Treasury to buy troubled securities from financial firms in an effort to ease a deepening credit crisis that is choking off business and consumer loans, the lifeblood of the economy, and contributing to a string of bank failures.

Officials say the final cost of the bailout will be far less than $700 billion because the government will resell the assets that it buys.

The final agreement disburses the money in parts, with Congress able to block the second $350 billion. It also provides for tighter oversight of the program by two boards, and requires the government to do more to prevent home foreclosures. Lawmakers also included efforts to restrict so-called golden parachute retirement plans for some executives whose firms seek help, and a provision allowing the government to recoup any losses after five years by assessing the financial industry.

Reporting was contributed by Robert Pear and Carl Hulse in Washington; Steven Lee Myers in Abington, Pa.; and Michael Cooper in Flagstaff, Ariz.

    Bailout Plan Wins Approval; Democrats Vow Tighter Rules, NYT, 4.10.2008, http://www.nytimes.com/2008/10/04/business/economy/04bailout.html

Pressure Builds on House After Senate Backs Bailout

October 2, 2008
The New York Times
By CARL HULSE

WASHINGTON — The Senate strongly endorsed the $700 billion economic bailout plan on Wednesday, leaving backers optimistic that the easy approval, coupled with an array of popular additions, would lead to House acceptance by Friday and end the legislative uncertainty that has rocked the markets.

In stark contrast to the House rejection of the plan on Monday, a bipartisan coalition of senators — including both presidential candidates — showed no hesitation in backing a proposal that had drawn public scorn, though the outpouring eased somewhat after a market plunge followed the House defeat. The Senate margin was 74 to 25 in favor of the White House initiative to buy troubled securities in an effort to avoid an economic catastrophe.

Only Senator Edward M. Kennedy, who is being treated for brain cancer, did not vote.

The two Senate leaders, Senators Harry Reid, Democrat of Nevada and the majority leader, and Mitch McConnell of Kentucky, the Republican leader, strongly urged their colleagues to approve the plan despite the political risk given public resentment.

“Supporting this legislation is the only way to make the best of a crisis and return our country to a path of economic stability, prosperity and growth,” said Mr. Reid, who asked that senators vote formally from their desks. The presence in the Senate of both presidential candidates in the final weeks of the campaign also gave weight to the moment. The political tension was clear as Senator Barack Obama walked to the Republican side of the aisle to greet Senator John McCain, who offered a chilly look and a brief return handshake.

Mr. McCain did not make remarks on the legislation. Mr. Obama, in his speech, said the bailout plan was regrettable but necessary and he referred to the stock market drop after the House vote. “While that decline was devastating, the consequences of the credit crisis that caused it will be even worse if we do not act now,” he said.

President Bush issued a statement applauding the Senate for its vote in favor of a bill he called “essential to the financial security of every American.” He urged the House to follow suit.

In the House, officials of both parties said they were increasingly confident that politically enticing provisions bootstrapped to the original bill — including $150 billion in tax breaks for individuals and businesses — would win over at least the dozen or so votes needed to reverse Monday’s outcome and send the measure to President Bush.

The stock market reflected nervous jitters over a vote that was to occur after it closed but that could affect the future of many Wall Street workers. The Dow Jones industrial average was off almost 220 points during the day, but recovered to close down just 19.6 points, or 0.2 percent, at 10,831.07.

Besides the tax breaks, senators also made a change that had drawn widespread support in recent days — a temporary increase in the amount of bank deposits covered by the Federal Deposit Insurance Corporation, to $250,000 from $100,000. And the entire package was attached to legislation requiring insurers to treat mental health conditions more like general health problems, a long-sought goal of many lawmakers who demanded such parity.

As the shape of the new bill became more clear Wednesday, some House Republicans and Democrats indicated that the changes were enough to get them to take another look at the measure and perhaps change their minds — even though the new items being added would substantially increase the burden on taxpayers.

Representative John Yarmuth, a Kentucky Democrat who on Monday voted no, said he found the new proposal more acceptable, as did Representative Jim Ramstad, a retiring Republican from Minnesota who voted in opposition as well.

“The inclusion of parity, tax extenders and the F.D.I.C. increases has caused me to reconsider my position,” Mr. Ramstad said. “All three additions have greatly improved the bill.”

Leaders of both parties in the House, who spent much of Wednesday on the phone taking the temperature of lawmakers not scheduled to return until Thursday, said they were identifying other potential converts as well, and were finding a more receptive audience for the revised measure because of the tax package and other changes.

Some conservative House Republicans and liberal Democrats remained adamantly opposed. “The bailout legislation that the Senate is sending back to the House is a fraternal twin to the one I voted against on Monday — meet the new bill, same as the old bill,” said Representative Joe Barton, Republican of Texas.

While popular, the tax breaks, which had been the center of a bitter dispute between House and Senate Democrats, caused problems as well.

A coalition of centrist Democrats led by Representative Steny H. Hoyer of Maryland, the majority leader, had refused to back the tax benefits unless they were deficit neutral — offset by tax increases or spending cuts elsewhere. The bill now includes the Senate version of the tax plan, which adds most of the cost to the deficit over the next decade.

But the Senate leaders decided to present the House with a take-it-or-leave-it choice, and it is possible some Democrats could desert the bill over the tactic. Mr. Reid said the Senate would remain in session this week to see how House members react and whether they might attempt to change the bill, forcing another Senate review.

Mr. Hoyer said he was disappointed in the Senate’s decision on the tax breaks and worried it could cost Democratic votes. “Certainly there are people who are upset we are making the deficit worse as we are trying to stabilize the economy,” Mr. Hoyer told reporters. But in a telephone conference call among the Democratic leadership Wednesday morning, he told his colleagues he would back the measure because the economic rescue needed to take priority, according to participants.

In the end, Senate leaders decided to overcome some of the ideological and political resistance that doomed the measure in the House with the tried-and-true Congressional approach of stuffing the bill with provisions that would make it hard for many lawmakers to resist.

“All I’m trying to do is get this thing passed,” said Mr. Reid, denying he was trying to jam the House by giving members no choice but to accept the tax proposal he favored or again reject the bailout.

The multiple tax breaks, called extenders in the Capitol because they renew or extend expiring tax benefits, appeal to many lawmakers and could provide a political argument for backing a bill that has otherwise been very unpopular.

Instead of siding with a $700 billion bailout, lawmakers could now say they voted for increased protection for deposits at the neighborhood bank, income tax relief for middle-class taxpayers and aid for schools in rural areas where the federal government owns much of the land.

“This bill has been packaged with a lot of very popular things to give it even more momentum,” said Senator Jeff Sessions, a Republican from Alabama, who is an opponent.

The approximately $150 billion in new tax breaks, which offer incentives for the use of renewable energy and relieve 24 million households from an estimated $65 billion alternative-minimum tax scheduled to take effect this year, would be offset by only about $40 billion in spending cuts or tax increases elsewhere.

Moreover, the increase in federal deposit insurance will not be financed over the short term, as the insurance program now is, by assessing premiums on banks that benefit. Instead, banks will get an open-ended line of credit directly to the Treasury Department. But the Congressional Budget Office noted that federal law requires the banks to eventually make up any shortfall and any loans to be repaid, though not until at least 2010.

The changes in the bill were measurable by volume. The initial proposal from the Treasury Department ran just three pages; the latest version exceeds 450.

After receiving the proposal from Treasury Secretary Henry M. Paulson Jr. almost two weeks ago, Congress instituted a series of changes, including additional oversight, steps to limit home foreclosures and restrictions on the compensation of executives of institutions that take part in the Treasury program.

Under pressure to tighten the plan even more, Congressional and administration negotiators decided to parcel out the $700 billion in installments, starting with a first tranche of $350 billion. And during a weekend of negotiations, they added as a final backstop a requirement that in five years the president must present Congress with a plan to make up any losses of tax funds by looking to the financial community to make up the difference.

Robert Pear contributed reporting.

    Pressure Builds on House After Senate Backs Bailout, NYT, 2.10.2008, http://www.nytimes.com/2008/10/02/business/02bailout.html

Senate Passes Bailout Plan; House May Vote by Friday

October 2, 2008
The New York Times
By CARL HULSE

WASHINGTON — The Senate strongly endorsed the $700 billion economic bailout plan on Wednesday, leaving backers optimistic that the easy approval, coupled with an array of popular additions, would lead to House acceptance by Friday and end the legislative uncertainty that has rocked the markets.

In stark contrast to the House rejection of the plan on Monday, a bipartisan coalition of senators — including both presidential candidates — showed no hesitation in backing a proposal that had drawn public scorn, though the outpouring eased somewhat after a market plunge followed the House defeat. The Senate margin was 74 to 25 in favor of the White House initiative to buy troubled securities in an effort to avoid an economic catastrophe.

Only Senator Edward M. Kennedy, who is being treated for brain cancer, did not vote.

The two Senate leaders, Senators Harry Reid, Democrat of Nevada and the majority leader, and Mitch McConnell of Kentucky, the Republican leader, strongly urged their colleagues to approve the plan despite the political risk given public resentment.

“Supporting this legislation is the only way to make the best of a crisis and return our country to a path of economic stability, prosperity and growth,” said Mr. Reid, who asked that senators vote formally from their desks. The presence in the Senate of both presidential candidates in the final weeks of the campaign also gave weight to the moment. The political tension was clear as Senator Barack Obama walked to the Republican side of the aisle to greet Senator John McCain, who offered a chilly look and a brief return handshake.

Mr. McCain did not make remarks on the legislation. Mr. Obama, in his speech, said the bailout plan was regrettable but necessary and he referred to the stock market drop after the House vote. “While that decline was devastating, the consequences of the credit crisis that caused it will be even worse if we do not act now,” he said.

President Bush issued a statement applauding the Senate for its vote in favor of a bill he called “essential to the financial security of every American.” He urged the House to follow suit.

In the House, officials of both parties said they were increasingly confident that politically enticing provisions bootstrapped to the original bill — including $150 billion in tax breaks for individuals and businesses — would win over at least the dozen or so votes needed to reverse Monday’s outcome and send the measure to President Bush.

The stock market reflected nervous jitters over a vote that was to occur after it closed but that could affect the future of many Wall Street workers. The Dow Jones industrial average was off almost 220 points during the day, but recovered to close down just 19.6 points, or 0.2 percent, at 10,831.07.

Besides the tax breaks, senators also made a change that had drawn widespread support in recent days — a temporary increase in the amount of bank deposits covered by the Federal Deposit Insurance Corporation, to $250,000 from $100,000. And the entire package was attached to legislation requiring insurers to treat mental health conditions more like general health problems, a long-sought goal of many lawmakers who demanded such parity.

As the shape of the new bill became more clear Wednesday, some House Republicans and Democrats indicated that the changes were enough to get them to take another look at the measure and perhaps change their minds — even though the new items being added would substantially increase the burden on taxpayers.

Representative John Yarmuth, a Kentucky Democrat who on Monday voted no, said he found the new proposal more acceptable, as did Representative Jim Ramstad, a retiring Republican from Minnesota who voted in opposition as well.

“The inclusion of parity, tax extenders and the F.D.I.C. increases has caused me to reconsider my position,” Mr. Ramstad said. “All three additions have greatly improved the bill.”

Leaders of both parties in the House, who spent much of Wednesday on the phone taking the temperature of lawmakers not scheduled to return until Thursday, said they were identifying other potential converts as well, and were finding a more receptive audience for the revised measure because of the tax package and other changes.

Some conservative House Republicans and liberal Democrats remained adamantly opposed. “The bailout legislation that the Senate is sending back to the House is a fraternal twin to the one I voted against on Monday — meet the new bill, same as the old bill,” said Representative Joe Barton, Republican of Texas.

While popular, the tax breaks, which had been the center of a bitter dispute between House and Senate Democrats, caused problems as well.

A coalition of centrist Democrats led by Representative Steny H. Hoyer of Maryland, the majority leader, had refused to back the tax benefits unless they were deficit neutral — offset by tax increases or spending cuts elsewhere. The bill now includes the Senate version of the tax plan, which adds most of the cost to the deficit over the next decade.

But the Senate leaders decided to present the House with a take-it-or-leave-it choice, and it is possible some Democrats could desert the bill over the tactic. Mr. Reid said the Senate would remain in session this week to see how House members react and whether they might attempt to change the bill, forcing another Senate review.

Mr. Hoyer said he was disappointed in the Senate’s decision on the tax breaks and worried it could cost Democratic votes. “Certainly there are people who are upset we are making the deficit worse as we are trying to stabilize the economy,” Mr. Hoyer told reporters. But in a telephone conference call among the Democratic leadership Wednesday morning, he told his colleagues he would back the measure because the economic rescue needed to take priority, according to participants.

In the end, Senate leaders decided to overcome some of the ideological and political resistance that doomed the measure in the House with the tried-and-true Congressional approach of stuffing the bill with provisions that would make it hard for many lawmakers to resist.

“All I’m trying to do is get this thing passed,” said Mr. Reid, denying he was trying to jam the House by giving members no choice but to accept the tax proposal he favored or again reject the bailout.

The multiple tax breaks, called extenders in the Capitol because they renew or extend expiring tax benefits, appeal to many lawmakers and could provide a political argument for backing a bill that has otherwise been very unpopular.

Instead of siding with a $700 billion bailout, lawmakers could now say they voted for increased protection for deposits at the neighborhood bank, income tax relief for middle-class taxpayers and aid for schools in rural areas where the federal government owns much of the land.

“This bill has been packaged with a lot of very popular things to give it even more momentum,” said Senator Jeff Sessions, a Republican from Alabama, who is an opponent.

The approximately $150 billion in new tax breaks, which offer incentives for the use of renewable energy and relieve 24 million households from an estimated $65 billion alternative-minimum tax scheduled to take effect this year, would be offset by only about $40 billion in spending cuts or tax increases elsewhere.

Moreover, the increase in federal deposit insurance will not be financed over the short term, as the insurance program now is, by assessing premiums on banks that benefit. Instead, banks will get an open-ended line of credit directly to the Treasury Department. But the Congressional Budget Office noted that federal law requires the banks to eventually make up any shortfall and any loans to be repaid, though not until at least 2010.

The changes in the bill were measurable by volume. The initial proposal from the Treasury Department ran just three pages; the latest version exceeds 450.

After receiving the proposal from Treasury Secretary Henry M. Paulson Jr. almost two weeks ago, Congress instituted a series of changes, including additional oversight, steps to limit home foreclosures and restrictions on the compensation of executives of institutions that take part in the Treasury program.

Under pressure to tighten the plan even more, Congressional and administration negotiators decided to parcel out the $700 billion in installments, starting with a first tranche of $350 billion. And during a weekend of negotiations, they added as a final backstop a requirement that in five years the president must present Congress with a plan to make up any losses of tax funds by looking to the financial community to make up the difference.

Robert Pear contributed reporting.

    Senate Passes Bailout Plan; House May Vote by Friday, NYT,  2.10.2008, http://www.nytimes.com/2008/10/02/business/02bailout.html