MercoPress. South Atlantic News Agency

US Senate approved rescue plan; Friday the main hurdle

The United States Senate approved Wednesday evening a new version of a 700 billion rescue plan for the troubled US financial system. Senators voted 74 to 25 in favor of the emergency legislation designed to stabilize volatile markets and limit further damage to the economy.

It included an increase in the level of government insurance for bank deposits and a raft of targeted tax breaks. The plan will now go before the House of Representatives, which narrowly rejected a similar bill on Monday. US presidential hopefuls John McCain and Barack Obama, who both support the rescue plan, returned from the campaign trail for the vote. Senate majority leader Harry Reid, a Democrat, said he was happy with the result and praised both candidates. "I think it shows that when we work together we can accomplish good things". "I think it speaks volumes that both of our presidential candidates are here and voting - both supporting this legislation." Speaking a few hours before the vote, President George W Bush said the bill needed to pass in order to calm volatile markets. "It's very important for us to pass this piece of legislation so as to stabilize the situation - so that it doesn't get worse and then our fellow citizens lose wealth and work," he said. The House of Representatives is expected to vote on the revised version on Friday, but it's not yet clear what could happen. US politicians have been relying on two tactics to mobilize support for the bill. First, they have been warning of the dire economic consequences of a defeat, a warning reinforced by the sharp fall in the stock market on Monday. Secondly, they are trying to offer incentives, and twist arms, to find the 12 additional votes they need to pass the bill. But the problem is that the public is even more pessimistic than politicians about the state of the economy, and still does not back the bail-out. According to a Rasmussen poll conducted on Monday, 41% of the public are "very concerned" that the US will slip into a Depression similar to the one triggered by the stock market crash of 1929. Nevertheless, the public is deeply split over the value of a rescue. Some 44% of the public say that Wall Street should take care of its own problems, while 45% back Congressional action to solve the financial problem. Only 45% say the rejection of the plan will hurt the economy. According to polling by the Pew Research Center, support for a bail-out plan has actually fallen from 57% to 48% in the past week (surveys conducted between 19-22 September and 27-29 September). Democratic voters appear more concerned than Republicans that Wall Street is getting a free ride. According to the Pew poll, 77% of Democrats (compared with 69% of Republicans) say that they are very concerned that "those who are responsible for causing this crisis will be left off the hook". That finding suggests that tougher measures to limit the gains on Wall Street, and executive pay, may be needed to gain public backing. Democratic voters are also particularly sensitive to the concern that the bill will not do enough to help homeowners in danger of losing their homes. Here the partisan divide appears greatest, with 66% of Democrats, but only 37% of Republicans, sharing this worry. This split explains why the Democrats in Congress failed to get provisions to expand help for homeowners into the final compromise bill. The amount that the bail-out will cost the taxpayer is a crucial concern for many voters, especially Republicans. In an earlier Rasmussen poll, those who thought that the government would get most of its money back from the bail-out plan (as US Treasury claims) supported it by a two-to-one margin, while those who thought the government would not get any money back rejected the deal by 61% to 18%. And among those who oppose the bail-out, 60% say the government is getting too involved in financial markets - while just 33% of those who support the bail-out hold this view. But even so, a majority (58%) of those supporting the bail-out say that they are concerned that "government action won't fix the things that caused the problem", according to Pew data. One reason for that mistrust may be people's doubts about those proposing the plan. The approval ratings of President George W Bush are at record lows, with just 26% of the public giving him a positive rating overall, and 22% approving of his handling of the economy. Treasury Secretary Henry Paulson does not fare much better. This would suggest that in order to gain support for the plan, the size or cost of the bail-out will have to be reduced, and the presidential candidates will have to give a stronger endorsement.