WASHINGTON — Congressional lawmakers grew uneasy Tuesday about the Bush administration's plan to spend $700 billion rescuing America's financial industry, demanding provisions that limit executive pay and assurance to taxpayers that they're not writing a blank check to bail out troubled firms.
Leaders of both parties were cautiously optimistic that they'd be able to pass a plan, perhaps by the end of this week, but they were struggling to iron out details. Republican conservatives objected to the size and scope of the package, while Democrats insisted on adding stronger government oversight and consumer protection. Changes were assured, but in the end the administration is likely to win approval of a massive bailout package.
"We've got to get this right. . . . There is no second act," said Senate Banking Committee Chairman Christopher Dodd, D-Conn. Senate Republican leader Mitch McConnell of Kentucky echoed that thought, adding, "We're anxious to act quickly."
The rank and file was stirring, however. Republican conservatives protested that the bailout is little more than an expensive giveaway to big corporations as well as an irresponsible government intrusion into the private sector.
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"This massive bailout is not the solution. It is financial socialism, and it is un-American," Sen. Jim Bunning, R-Ky., said at a Senate Banking Committee hearing at which members of both parties spent five hours grilling top administration officials.
Democrats were concerned that chief executive officers and big companies stood to benefit at the expense of middle- and lower-class taxpayers.
"This proposal is stunning and unprecedented in its scope and lack of detail," Dodd said. "It would allow the (Treasury) secretary to intervene in the economy by purchasing at least $700 billion of toxic assets. . . . It would do nothing to help even a single family save a home."
Still, the point man for the package in the House of Representatives, Financial Services Committee Chairman Barney Frank, D-Mass., said he didn't think that the level of dissent on both sides of the aisle was enough to derail a major bailout package, and that "our primary focus at this point is still getting the thing nailed down with the Senate. I think we will be together on everything.
"Am I concerned about all the concerns? You know, this is legislation. There are some people who I think are trying to derail it, but there are a lot of people who honestly want to make this work."
Treasury Secretary Henry Paulson, who appeared with Federal Reserve Board Chairman Ben Bernanke before Dodd's committee, tried to show empathy with the public.
"I share the outrage people have," said Paulson, a former CEO of the huge investment firm Goldman Sachs. "It's embarrassing to look at this. I think it's embarrassing to the United States of America. There's a lot of blame to go around."
In the House, Republican members met privately with Vice President Dick Cheney and White House Budget Director Jim Nussle in what was described as a tense session.
"People want to try to enjoy capitalism on the way up, socialism on the way down, and we know where that is headed," said Rep. Jeb Hensarling, R-Texas. "What we will end up with, I believe, is less freedom, less opportunity for the next generation."
Whether such anger will erupt into the kind of backbench rebellion that forced negotiators in the 1980s and 1990s to make changes in tax and budget deals remained unclear.
House Republican leader John Boehner of Ohio explained the reservations that many GOP members shared.
"It's the size of the solution that causes great concern, and trying to gauge the risk-to-reward ratio," he said. "How serious is the problem, and how imminent is the crisis?"
Still, leaders of both parties in both chambers of Congress remained committed to moving ahead with some substantial financial-system rescue plan.
"It's about saving our economy," Boehner said.
House Speaker Nancy Pelosi, D-Calif., said that Democrats were unified on the need for legislation but that it must show that "the party is over for compensation, for CEOs who take the golden parachute as they drive their companies into the ground."
The House is expected to debate the plan first, perhaps as early as Thursday. "There's going to be a lot of soul searching over the next few days," said Rep. Phil Gingrey, R-Ga.
He — like many others in Congress — saw echoes of other big bills they'd rushed to approve in recent years and later regretted, notably the 2002 measure to give President Bush broad authority to wage war against Iraq and the costly Medicare prescription-drug program.
Many lawmakers were wary of giving Bush what they saw as another blank check.
Rep. Gene Taylor, a fiscally conservative Democrat from Mississippi, said he intended to oppose a bailout on the $700 billion scale that Bush sought. "I'm not willing to do that," he said. "What are the real costs? What do we get for this?"
The path to approval seemed somewhat smoother in the Senate.
"All the Republican senators hate having to deal with this kind of crisis, especially with government involvement in the private sector," said Senate Republican Conference Chairman Jon Kyl of Arizona. However, he added, "Republicans have determined we're going to try our very best to work on this in a constructive way in a very short period of time."
The Bush administration refused to budge publicly from its stance that any legislation should be passed "quickly and cleanly," as Paulson reiterated Tuesday.
Senate staff members said they expected the administration to concede many key points that Democrats were pushing, but that wasn't clear in Paulson's testimony.
Paulson and Bernanke said that without fast congressional action, the nation's financial system faced enormous trouble that could endanger the broader economy.
"At this juncture, in light of the fast-moving developments in financial markets, it is essential to deal with the crisis at hand," Bernanke said.
Democrats want stronger oversight of the rescue plan, limits on executive pay at firms that take bailout money and assurance that consumers who are having difficulty paying their mortgages will get some leniency.
"It seems to me that the proposal rewards the bad actors, those financial institutions that engage in irresponsible lending, have bad assets on their books and need help from the government to stay afloat," said Sen. Tim Johnson, D-S.D.
"What punitive actions are being taken against these companies and their CEOs?" he asked Paulson.
The secretary explained that his plan is "broad based and it is dealing with the root cause" of the problems and that "there have been very harsh consequences," though he didn't specify what they were.
Paulson and Bernanke emphasized that taxpayers probably wouldn't wind up spending $700 billion because, over time, the government would sell off now-unmarketable assets once markets returned to stability, and the Treasury would pocket the proceeds.
Sen. Charles Schumer, D-N.Y., wondered why the entire $700 billion was needed at once. Why not authorize $150 billion now, then re-evaluate after the plan has a track record?
"That would be a grave mistake," Paulson said. "This is about market confidence and the tools to do the job."