Senate Debates Rescue Plan
By John Jessup
CBN News Washington Correspondent
October 1, 2008
CBNNews.com - WASHINGTON - The Senate is set to vote on a revised version of the government's plan to rescue the financial system. The vote comes as the credit crisis is tightening its squeeze on the economy.
Tonight's Senate vote sets the stage for a possible breakthrough in a political process that, at times this week, has broken down.
What are the alternatives to the bailout plan? Watch Alabama Congressman Robert Aderholt, who voted against the first bill, following this report.
"This is not the time to fix the blame. This is the time to fix the problem," Minority Leader Mitch McConnell said.
Majority Leader Harry Reid said, "We need to move forward on doing what's right for our country."
Senators hope their revamped version of a government plan to shore up the nation's financial systems will draw the support of lawmakers in the House and help to avert a major economic crisis.
One change to the bill includes tax relief for Americans affected by the alternative minimum tax.
There will also be a possible modification of 'marked-to-market' accounting rules so for current assets, even if they're held for years, to more accurately reflect current market values.
And finally the bill includes a temporary raising of the federal deposit insurance limit from $100-thousand to $250-thousand - an idea that could bring relief to the banking system and stimulate lending.
This time around, lawmakers are trying to do a better job of selling their plan. They're explaining that's it not a bailout but rather a rescue plan for the overall American financial system - from Wall Street to Main Street.
And they're warning what could be at stake if it does not pass.
"The market will drop and there will be no coming back up. This time your 401K, your pension plan, your retirement account will be hurt in a way that will take years to recover," Sen. Bob Bennett said.
Markets Rebound on Bailout Hopes
Despite the measure's defeat earlier this week in the House, the prospect of the plan becoming law has investors hopeful.
Bargain hunters have sent stocks on a rebound, but at the same time confidence in credit lending is running dangerously low.
And that has serious implications on businesses - both large and small - for the common consumer in the market looking to buy.
Economist Brad Setser with the Council on Foreign Relations said, "If we have to go from a world where we're used to borrowing to one where we can't borrow, that's going to be a significant drag on economic activity. People are going to feel the pain. It just takes a little while."
While they continue to negotiate a workable deal, top officials from The White House to Congress say if financial concerns like "frozen credit" appear to be bad now, they will only get worse for ordinary Americans in the future if they don't pass some kind of rescue plan.
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