In a solid win for the Obama administration before it even takes office, the Senate on Thursday easily voted down a measure that would have withheld the remaining half of the $700 billion bailout fund.
The chamber voted down the resolution of disapproval (S J Res 5) by a vote of 42-52 after a week of intense lobbying by the Obama team as it begins addressing the nation's financial troubles.
Next up is economic stimulus legislation that is expected to be worth more than $800 billion and will challenge the administration's ability to win crucial votes in Congress.
"This was a test of leadership at a time when leadership was desperately needed in our country," said Senate Majority Leader Harry Reid, D-Nev.
But the outcome remained in doubt until early Thursday afternoon. Just a few hours before senators cast their votes, leaders on both sides of the aisle received a letter from Obama providing more details about the conditions he proposes to attach to the remaining $350 billion of bailout money. The Republican caucus requested that information during a meeting with Obama advisers Wednesday night.
Several senators credited other parts of the letter with tipping the scales for the vote. Obama also proposed directing a minimum of $50 billion toward foreclosure mitigation, increased transparency in the financial system and stronger reporting requirements for firms receiving bailout funds.
The letter, signed by Lawrence Summers, Obama's top economic adviser, also placed the new president in the position to approve any transaction proposed by the Treasury Department.
"[Obama] has to sign off on it," said Iowa Democrat Tom Harkin, who voted against the resolution. "We know where the buck stops."
Obama representatives spent the last week lobbying hard for the release of the next $350 billion from the unpopular Troubled Asset Relief Program (TARP) created last October (PL 110-343). But as of Wednesday night, Republicans were still searching for guarantees that the money would not go to industries outside the financial sector.
The letter said the administration intends to use TARP funds only to aid financial institutions. Automakers would receive more funds only to guarantee long-term viability.
"I've had many conversations with officials of the incoming Obama administration and they've promised me, and all Republicans for that matter, that they intend to dedicate the funds to shoring up the financial markets," said Jon Kyl, R-Ariz., the minority whip, who joined a majority of Democrats and five other Republicans to vote against the resolution.
Even if the Senate had passed the measure and the House had followed suit, there was little chance that it actually would have halted the release of the second half of the funds. Joint resolutions must be signed by the president to take effect, and Obama had vowed to veto it.
Playing the Numbers Reid employed nimble timing on Thursday to pull a few extra votes onto his side. The vote took place at 4:30 p.m., allowing both new Illinois Sen. Roland W. Burris and Sen. Joseph R. Biden Jr. of Delaware, the vice president-elect, to vote on the floor. Burris was sworn in at 2 p.m. Biden officially resigned from the Senate at 5 p.m.
As Reid walked Burris up to the well for his first vote as a senator, Biden was casting his final one. Both voted against the resolution.
But the political difficulty of the vote was not lost on the senators, even those on the administration's side.
"This [vote] is not going to win you any parades," said Connecticut Democrat Christopher J. Dodd, the chairman of the Senate Banking, Housing and Urban Affairs Committee. "This is not going to get you a plaque or a medal."
The president-elect echoed Dodd's comment.
"I know this wasn't an easy vote because of the frustration so many of us share about how the first half of this plan was implemented," Obama said in a statement.
It was a decision that appeared to weigh heavily on senators as they exited the Senate floor Thursday. There remains widespread anger in Congress about how the Bush administration has used the money. Lawmakers of both parties have joined the public in complaining bitterly about what they see as a lack of accountability and transparency.
Democrat Ben Nelson wanted to support Obama, but said he couldn't go against Nebraskans who opposed the first installment.
"I was concerned about voting for something based on mere assertions," Nelson said.
Treasury Secretary Henry M. Paulson Jr. sold the bailout legislation to Congress as an authorization to purchase troubled assets, notably mortgage-backed securities, from banks and other financial institutions to shore up their balance sheets and get credit flowing again. But he soon abandoned that idea and shifted to making direct investments in banks.
Regardless of the votes on both sides, there was one big winner -- the incoming administration.
"Every time we asked a question, it was promptly answered," said Senate Minority Leader Mitch McConnell, R-Ky. "So far, Republican interactions with the incoming administration have been quite encouraging and appreciated."
That political capital will be essential as the House and Senate battle over an economic stimulus plan that some estimate could reach $1 trillion.
Across the Capitol, the House continued its efforts to affect the fate of the second half of the TARP funds. Members spent Thursday considering a bill (HR 384) that would attach conditions to how the Treasury Department allocates the money. A vote on final passage is expected next week.
The chamber voted down the resolution of disapproval (S J Res 5) by a vote of 42-52 after a week of intense lobbying by the Obama team as it begins addressing the nation's financial troubles.
Next up is economic stimulus legislation that is expected to be worth more than $800 billion and will challenge the administration's ability to win crucial votes in Congress.
"This was a test of leadership at a time when leadership was desperately needed in our country," said Senate Majority Leader Harry Reid, D-Nev.
But the outcome remained in doubt until early Thursday afternoon. Just a few hours before senators cast their votes, leaders on both sides of the aisle received a letter from Obama providing more details about the conditions he proposes to attach to the remaining $350 billion of bailout money. The Republican caucus requested that information during a meeting with Obama advisers Wednesday night.
Several senators credited other parts of the letter with tipping the scales for the vote. Obama also proposed directing a minimum of $50 billion toward foreclosure mitigation, increased transparency in the financial system and stronger reporting requirements for firms receiving bailout funds.
The letter, signed by Lawrence Summers, Obama's top economic adviser, also placed the new president in the position to approve any transaction proposed by the Treasury Department.
"[Obama] has to sign off on it," said Iowa Democrat Tom Harkin, who voted against the resolution. "We know where the buck stops."
Obama representatives spent the last week lobbying hard for the release of the next $350 billion from the unpopular Troubled Asset Relief Program (TARP) created last October (PL 110-343). But as of Wednesday night, Republicans were still searching for guarantees that the money would not go to industries outside the financial sector.
The letter said the administration intends to use TARP funds only to aid financial institutions. Automakers would receive more funds only to guarantee long-term viability.
"I've had many conversations with officials of the incoming Obama administration and they've promised me, and all Republicans for that matter, that they intend to dedicate the funds to shoring up the financial markets," said Jon Kyl, R-Ariz., the minority whip, who joined a majority of Democrats and five other Republicans to vote against the resolution.
Even if the Senate had passed the measure and the House had followed suit, there was little chance that it actually would have halted the release of the second half of the funds. Joint resolutions must be signed by the president to take effect, and Obama had vowed to veto it.
Playing the Numbers Reid employed nimble timing on Thursday to pull a few extra votes onto his side. The vote took place at 4:30 p.m., allowing both new Illinois Sen. Roland W. Burris and Sen. Joseph R. Biden Jr. of Delaware, the vice president-elect, to vote on the floor. Burris was sworn in at 2 p.m. Biden officially resigned from the Senate at 5 p.m.
As Reid walked Burris up to the well for his first vote as a senator, Biden was casting his final one. Both voted against the resolution.
But the political difficulty of the vote was not lost on the senators, even those on the administration's side.
"This [vote] is not going to win you any parades," said Connecticut Democrat Christopher J. Dodd, the chairman of the Senate Banking, Housing and Urban Affairs Committee. "This is not going to get you a plaque or a medal."
The president-elect echoed Dodd's comment.
"I know this wasn't an easy vote because of the frustration so many of us share about how the first half of this plan was implemented," Obama said in a statement.
It was a decision that appeared to weigh heavily on senators as they exited the Senate floor Thursday. There remains widespread anger in Congress about how the Bush administration has used the money. Lawmakers of both parties have joined the public in complaining bitterly about what they see as a lack of accountability and transparency.
Democrat Ben Nelson wanted to support Obama, but said he couldn't go against Nebraskans who opposed the first installment.
"I was concerned about voting for something based on mere assertions," Nelson said.
Treasury Secretary Henry M. Paulson Jr. sold the bailout legislation to Congress as an authorization to purchase troubled assets, notably mortgage-backed securities, from banks and other financial institutions to shore up their balance sheets and get credit flowing again. But he soon abandoned that idea and shifted to making direct investments in banks.
Regardless of the votes on both sides, there was one big winner -- the incoming administration.
"Every time we asked a question, it was promptly answered," said Senate Minority Leader Mitch McConnell, R-Ky. "So far, Republican interactions with the incoming administration have been quite encouraging and appreciated."
That political capital will be essential as the House and Senate battle over an economic stimulus plan that some estimate could reach $1 trillion.
Across the Capitol, the House continued its efforts to affect the fate of the second half of the TARP funds. Members spent Thursday considering a bill (HR 384) that would attach conditions to how the Treasury Department allocates the money. A vote on final passage is expected next week.
