Congress Attempts To Rescue Economy With Bipartisan Bailout Proposal

Counterproposal to Bush's $700 billion plan calls for Treasury to buy bad mortgages.

Less than 24 hours after President Bush made a prime-time speech explaining the seeds of the current financial crisis and making a plea to pass legislation to help turn the economy around, congressional leaders hammered out a bipartisan counterproposal to his $700 billion bailout proposition.

According to CNN, the deal reached by Democrats and Republicans in the House and Senate on Thursday afternoon (September 25) would include provisions that help homeowners who are facing foreclosure and rein in the pay packages of executives at the firms that are being bailed out, while providing oversight for the Treasury Department's efforts to buy back bad mortgage securities from banks. Details of the plan were not available at press time.

"We've reached a fundamental agreement on a set of principles, one, for taxpayers, which is tremendously important," said Democratic Senator Christopher Dodd, one of the key leaders of the effort. "We're very confident we can act expeditiously."

Not everyone was sold on the plan, however. Ohio Representative John Boehner said that House Republicans have not yet agreed to any plan, according to CNN. A number of Republicans have balked at the enormous price tag for the bailout, saying that it smacks of the kind of big-government intervention into the private sector that is historically anathema to the party.

The Wall Street Journal reported that instead of the Treasury Department receiving the lump sum at one time, the money will be doled out in increments: $250 billion initially and another $100 billion without further approval necessary. Congress will have the option to block the last installment of $350 billion if it is unhappy with the bailout program. The new proposal also asks that the Treasury be "reimbursed for their expenditures" when the market gets back on an even keel.

The breakthrough happened a few hours before a scheduled meeting at the White House on Thursday afternoon between congressional leaders, the president and presidential candidates Senators John McCain and Barack Obama, who were summoned to Washington from the campaign trail to help lead the talks.

In a surprise announcement on Wednesday, McCain said he was suspending all campaign activity in order to get back to Washington to help sort out the financial mess. Before releasing a joint statement with Obama stressing the importance of Congress working together to pass legislation, McCain also asked that Friday night's scheduled presidential debate be postponed until the bailout bill is passed. Obama and the Commission on Presidential Debates have so far declined to honor that request.

As of Thursday morning, Mississippi Governor Haley Barbour said he was looking forward to the debate, which is scheduled to take place at the University of Mississippi in Oxford. "This is going to be a great debate tomorrow night, and we're excited about it," the Republican governor said.