Bush on bailout: ‘A lot of people are watching’

President Bush and congressional leaders lobbied furiously Thursday for enough House support to push the troubled $700 billion financial industry bailout bill to the finish line, and the measure won converts from both parties on the eve of a showdown vote.

Bush said “a lot of people are watching” and he kept up his pleas from the White House as Democratic and Republican leaders worked over wayward colleagues wherever they could find them. Bush argued that the measure represents the “best chance” to calm unnerved financial markets and ease a widening credit crunch.

Speaking to reporters during a meeting with business executives, Bush said the increasingly tight credit markets are not just hitting big banks in New York City, but in some instances threatening the existence of small businesses across the country. He said Congress “must listen” to those arguing for passage of the bill, derided by many on Capitol Hill and within the general public as a handout to a risk-taking Wall Street.

The much-maligned measure was returned to the House after the Senate resuscitated it with tax cuts and other sweeteners in a 74-25 vote late Wednesday. The bill had been defeated in House narrowly on Monday.

The Senate’s addition of some $110 billion in tax breaks and other sweeteners helped satisfy some Republican critics, but angered conservative so-called “Blue Dog” Democrats concerned about swelling the deficit. Still, Rep. Steny Hoyer, the second-ranking House Democrat, predicted the number of Democratic defectors from the measure “is going to be minimal.”

The rescue package would let the government spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions. If successful, advocates say, that would allow frozen credit to begin flowing again and prevent a serious recession.

In efforts to appease GOP opponents, the Senate-passed bill contains a provision to raise, from $100,000 to $250,000, the cap on federal deposit insurance.

It also extends several tax breaks popular with businesses, which are favorites for most Republicans. It would keep the alternative minimum tax from hitting 20 million middle-income Americans, which appeals to lawmakers in both parties. And it would provide $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana. Help for rural schools was aimed mainly at lawmakers in the West.