(CNSNews.com) – As millions of Americans wonder how the nation’s elected leaders, agency heads and financiers allowed bad loans to jeopardize the U.S. financial system, the U.S. Senate began debating a “rescue” bill that it expects to vote on Wednesday night.
As part of that debate, Senate Majority Leader Harry Reid (D-Nev.) found himself defending tax breaks on the Senate floor Wednesday morning, an unusual position for a liberal Democrat who strongly opposed the Bush tax cuts.
In an attempt to sweeten the $700-billion deal rejected by the House on Monday, the Senate’s rescue/bailout package includes Alternative Minimum Tax relief, $8 billion in tax relief for natural disaster victims, and $78 billion in renewable energy incentives and extensions of expiring tax breaks. All told, it would cost about $112 billion over five years, the Associated Press reported.
“We’ve got to get this done,” Sen. Harry Reid said on Wednesday morning. “We cannot leave Washington without doing the financial rescue package and not doing this tax-extender bill.”
Although legislation is never perfect, Reid said, “these tax extenders are so important for the American people, it would not be good for us to leave here, it would be a blight on this Congress, not to pass these tax extenders.”
Reid emphasized the tax extensions are not for the wealthy. They’re for “people who are working for a living, trying to have a job, keep a job. Jobs will be created. I repeat – tens of thousands of jobs will be created,” Reid said.
Reid has blasted the President Bush's tax cuts as offering “next to nothing to average Americans while giving away the store to multi-millionaires.” Reid, in fact, pressed the Bush administration to roll back the tax cuts.
President Bush has insisted all along that tax cuts spur economic growth, and on Wednesday, Reid himself indicated that tax cuts for businesses and the middle class do create jobs.
According to the Associated Press, the Senate bill appears likely to pass – something that would put pressure on the House to go along and send the measure to the White House.
But House Majority Leader Steny Hoyer (D-Md.) said the tax provisions could complicate House passage.
"There's no doubt the tax package is very controversial," Hoyer told NBC’s "Today" show, adding that "there's no doubt in my mind that the Senate added this because they thought that's the only way they could get it passed."
Hoyer said the tax breaks may spark moderate Democrats’ concerns about running up the budget deficit.
The Senate bill also would boost the government's $100,000 cap on insured bank deposits to $250,000.
“The question is not how we got here, but how we get out and get our economy back on its feet,” Senate Republican Leader Mitch McConnell (Ky.) said on the Senate floor Wednesday morning.
McConnell, stressing bipartisanship, said after “extensive consultation” with Senate Majority Leader Harry Reid and other party leaders in the Senate, “We believe that we have crafted a way to go forward and get us back on track. This is the only way to get the right kind of solution for the American people,” he said.
McConnell said both Sens. Barack Obama and John McCain are returning to Washington later Wednesday “to embrace this effort and help us reassure the American people that we’re going to fix this problem.”
The American people, many of them resisting a $700-billion taxpayer infusion for credit-strapped Wall Street, registered such resistance with their elected representatives earlier this week that the Emergency Economic Stabilization Act of 2008 failed to pass the House on Monday.
Both conservatives and liberals voted against it, even though the Bush administration stressed that the government would use taxpayers’ money to buy securities that might end up putting some of the money back in the Treasury.