Congress Fails to Address Worsening Recession
Article from the October 9, 2008 edition of the CHN Human Needs Report:
Congress Enacts Legislation Aimed at Easing Financial Crisis,
But Fails to Address Worsening Recession
Fearing the consequences of more delay in responding to failing financial institutions, frozen credit, and falling stock prices, Congress enacted legislation to throw up to $700 billion at the problem, albeit with somewhat less abandon than originally proposed by Treasury Secretary Henry Paulson. After the House surprised observers by rejecting the deal negotiated on a bipartisan basis, the Senate passed a similar bill with a few significant additions. To reduce the threat of a run on banks, the financial plan added an increase in the size of insured deposits in banks covered by the Federal Deposit Insurance Corporation (FDIC) from $100,000 to $250,000 per account. The Senate also added its $150 billion package of extended tax cuts, new tax incentives for renewable energy, and an improvement in the Child Tax Credit, as well as the bill requiring mental health parity in health insurance plans (see articles about the tax package and the mental health provisions in this issue). The Senate bill passed 75-24 on October 1.
Proponents of more substantial aid for homeowners and more teeth in the requirement that the federal government gain an ownership share of financial institutions bailed out by the bill wanted to see those improvements included in the new version. Adding such provisions would have attracted some of the progressive Members of the House who opposed the bill when it was defeated in the House on Monday, September 29. Instead, the leadership in both House and Senate emphasized the need for more Republican votes (only 65 House Republicans supported the bill when it went down on the 29 th ). Despite a vigorous push for a change to allow home mortgages to be renegotiated as part of court bankruptcy proceedings as well as efforts to include economic recovery measures such as an extension of unemployment benefits, no additional forms of help for “ Main Street ” were included.
Even though the bill emerging from the Senate did not substantially strengthen protections for taxpayers and homeowners or help with economic recovery, more House Democrats switched their votes from no to yes than did House Republicans (32 Democrats switched; 26 Republicans did). The final vote for the Emergency Economic Stabilization Act of 2008 ( H.R. 1424) was 263-171, on October 3. The President signed the bill the same day.
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