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Senate approves bailout; Deal says he may vote against plan

POSTED: October 6, 2008 5:00 a.m.

When Nathan Deal took his household trash to a Hall County compactor site Wednesday, he got an earful from his constituents. They wanted him to do the same thing with the proposed financial bailout: Dump it.

The Republican Congressman returns to Washington today where the U.S. House is to once again take up the $700 billion bailout of financial institutions. Unless there are major changes, his vote is likely to be against the package.

The bill passed the Senate Wednesday night on a vote of 74 to 25. Georgia Sens. Saxby Chambliss and Johnny Isakson, both Republicans, voted for the bill.

Senators loaded the economic rescue bill with tax breaks and other sweeteners for the right and left, hoping to secure approval in the House by Friday, just days after lawmakers there, including Deal, rejected an earlier version and sent markets plunging around the globe. The measure has not caused the same uproar in the Senate, where both parties’ presidential candidates, Republican John McCain and Democrat Barack Obama, were making rare appearances to vote their support. That would send the package back to the House, where passage would require a turnaround of 12 votes from Monday’s 228-205 defeat. Leaders in both parties, as well as private economic chiefs everywhere, said Congress must quickly approve some version of the measure to start loans flowing and stave off a potential national economic disaster.

The phones at Deal’s offices, both in the district and in Washington, have been ringing with calls from constituents, most of whom oppose the bailout.

"What the Senate has done has taken the House bill that was voted down and added some things to it," Deal said. "We’ve got some indications that it is going to have some earmarks in it on things that are totally unrelated, and those always give us concern."

As revised by the Senate, the package would extend several tax breaks popular with businesses. It would keep the alternative minimum tax from hitting 20 million middle-income Americans, and provide $8 billion in

tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana. The bill would not point to offsetting spending cuts to pay for the alternative minimum tax and disaster provisions, but it would have revenue offsets for part of the energy and extension measures. The failure to offset many of the tax cuts angered the House’s band of "Blue Dog" Democrats.

The bill includes a provision to raise from $100,000 to $250,000 the cap on federal deposit insurance. This was a bid to reassure individuals and small businesses that their money would be safe in the event their banks collapsed. It was particularly geared toward small banks that fear customers will pull their money and park it in larger institutions seen as less likely to fold. The Senate specializes in high-stakes legislating-by-enticement, and the long list of sweeteners it added was designed to attract votes from various constituencies.

However, the bill includes new earmarks, including an exemption for federal excise taxes on wooden arrows designed for use by children and an earmark which gives litigants in the 1989 Exxon Valdez incident an opportunity to place a portion of their settlements into a retirement account.

"Those are the enticements for getting the necessary change of votes on the House side," Deal said, adding that the appeal may be to the 95 Democrats who voted with conservative Republicans in defeating the bill on Monday.

But aside from the alternative minimum tax, Deal doesn’t find much in the Senate bill he likes.

"I don’t think there is enough of a change to vote for it," Deal said. "The primary objection I have is just the fundamentals of the way this program is set up. I would have preferred to follow the savings and loan model of the 1980s."

Deal said Federal Reserve officials who were in charge in that era told House members last week that the savings and loan bailout ended up costing taxpayers $1.8 billion.

"Putting the government in the position of owning the bad debt, rather than assisting the people who do own it to work their way out of it, is a huge philosophical difference," Deal said, calling the bailout a "socialistic approach."

The Associated Press contributed to this report.



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