WASHINGTON - Democrats won a key concession from the White House on legislation to bail out the financial industry yesterday, then sought to scale back the $700 billion price tag.
With the Bush administration's original proposal deeply unpopular in Congress, top House leaders issued an upbeat statement at day's end saying that they had made progress toward revised legislation. "We are committed to continuing to work cooperatively and on a bipartisan basis to safeguard the interests of the American taxpayers," said Speaker Nancy Pelosi, D-Calif., and House Republican leader John Boehner of Ohio.
But they offered no timetable on a bailout that the administration said was needed more with each passing day. President Bush took to the airwaves last night to press the point that the bailout is important to everyone, not just Wall Street, saying that there could be a "long and painful recession" if it isn't passed.
Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke spent most of the day in the Capitol, shuttling between public hearings on the proposal and private meetings with lawmakers.
Paulson agreed to demands from critics in both parties to limit the pay packages of Wall Street executives whose companies would benefit from the proposed bailout.
"The American people are angry about executive compensation and rightfully so," Paulson told the House Financial Services Committee.
At the same time, Democrats were asking the Bush administration to dramatically cut the size of the rescue and then come back to Congress later if they need more.
Under that plan, which was still emerging, Congress would approve a fraction of what Bush is asking for - perhaps $150 billion or $200 billion - to allow the government to begin rescuing tottering financial companies.
Rep. Barney Frank, D-Mass., said yesterday, "Ultimately $700 billion has to be available but . . . they are making progress about how to give people some assurance that it is not going to go to $700 billion in one fell swoop."
The heart of the unprecedented plan, dramatically unveiled less than a week ago, involves the government buying up sour assets of tottering financial firms to keep them from going under and to stave off a potentially severe recession and the accompanying lost jobs and further home foreclosures.
Compounding the administration's challenge, Republicans and Democrats both say that Bush has lost credibility, particularly in cases where he argues that there will be dire consequences if Congress doesn't act.