As Planned (This Time)

Congressional leaders added a whole lot of sweeteners to the bailout bill and pulled off a victory in the Senate. One of the new aspects added by the Senate was raising FDIC insurance from $100,000 to $250,000 to cover greater amounts of money from a single depositor in a single bank. Businesses and anybody else who has more than $100,000 in the bank no longer have to be as careful about spreading it among banks to keep it all insured. Another new aspect was $150 billion in tax cuts (specifically in extending current tax breaks that were getting ready to expire). To draw Republicans, you always need tax cuts. The final tally was 74-25 (Ted Kennedy was the only senator not present to vote); Obama, Biden, and McCain all voted yes.

Will all this be enough to draw a handful of votes in the House (without pushing corresponding votes away)? We'll be able to find out soon, likely before the week is out. It will be hard to tell how many House members have been enticed by the changes to the bill and how many were freaked out by Monday's largest point drop in Dow Jones history. That's got to be sobering if you're theoretically responsible for keeping the economy going. I suspect that the House will want to put some sort of stamp on it themselves, which will necessitate sending it for another pass by the Senate.

As for my own position, I'm going to vote for a bailout myself and (once again) defer to Krugman:

I think that Congressional leaders know that it’s a bad bill, but feel compelled to defend it, because they’re (rightly) scared of the financial consequences of a second rejection. And to some extent economists like myself are in the same position; I think I called it the “hold your nose caucus.”

So am I for the bill? Yuk, phooey, I guess so. And I’m very angry at Paulson for putting us in this position.