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Senate Democrats emerged from a meeting Wednesday with Treasury Secretary Henry Paulson to report a general, conceptual — but fragile — agreement on a $700 billion plan to rescue the U.S. financial markets.
Senators said Paulson and the Democrats struck very tentative deals on Democratic demands on oversight and transparency, executive pay limits, and equity interest on taxpayers’ behalf as part of the massive plan. A hard-fought Democratic provision to allow bankruptcy judges to revise mortgage terms was not likely to survive the horse-trading, however, as Paulson would not agree to the provision that is already in the House and Senate versions.
Majority Whip Dick Durbin (D-Ill.) said a bill could be produced as early as Thursday, with debate and a vote likely over the weekend. Ideally, Durbin said the Senate would finish the bill before Wall Street opens on Monday.
“There is high anxiety about the opening of the markets on Monday,” Durbin said. “It’s good to have a deadline, and we have a deadline now, with the Jewish holiday and the opening of the market. Frankly, I want us to stick to that. If we start talking about another week or two, it will take another week or two.”
Senators cautioned that the package’s fragile framework could very easily fall apart as more specific definitions and details begin to be ironed out.
“We can have these broad agreements in principle, but it’s got to translate into details,” said Budget Committee Chairman Kent Conrad (D-N.D.). “And there’s a lot of work to be done.”
Senators described a very somber, serious meeting, with Paulson describing the risk of inaction and working hard to sell the plan to skeptical Democrats during the closed-door caucus meeting. Paulson said unemployment rates could approach 10 percent if the plan was not adopted, senators said, although he did indicate possible receptiveness to the idea of implementing it in stages. Such a plan, Paulson told senators, has worked in countries like Japan, where financial rescue plans were done in stages.
“He talked about the risks in the markets, the risk of the financial system locking up, the risk of companies not being able to borrow money, the risk of major firms failing, the risk of a substantial increase in unemployment,” said Conrad.
Presidential politics hung thickly throughout the meeting, held just hours after Republican nominee Sen. John McCain (Ariz.) announced he was suspending his campaign and returning to Washington to participate in the debate. McCain has urged his Democratic rival, Sen. Barack Obama (D-Ill.) to do the same and postpone Friday night’s planned debate, but Obama has refused.
Democrats defended that decision Wednesday night, accusing McCain of an attempt to inject presidential politics into the process with his presence, and that the debate should be held.
“The American people need to hear from both candidates,” said Sen. John Kerry (D-Mass.), the party’s 2004 presidential nominee. “This notion of rushing to Washington and grandstanding, frankly, is I think inserting presidential politics right into it. It’s silly and impulsive and erratic and doesn’t do justice to the process of running for president.”
Kerry noted that McCain doesn’t even sit on the Senate’s Banking or Finance committees.
“To the best of my knowledge, he doesn’t serve on any of those committees,” Kerry said.
But Sen. Joseph Lieberman, I-Conn., a top McCain supporter, said both nominees can play “very important” roles in shaping the debate.
McCain can help “take what I see as the conceptual agreement and now work out the details, because it’s clear from this discussion that the details are not worked out.”
The Senate has just two more working days before its scheduled Friday adjournment, with an agreement still outstanding on a continuing resolution to fund the government.
Most seemed resigned to the idea of weekend work, especially on the financial bill, and several also said they weren’t convinced that a Monday morning deadline was even feasible or necessary.
“I’m not sure that’s possible,” said Sen. Robert Casey (D-Pa.) “For the life of me, I can’t see the difference from an economic or even a confidence circumstance, the difference between Friday and a day or two days later or Monday.”