WASHINGTON - Senate leaders scheduled a vote tonight on a $700 billion financial bailout package after agreeing to add tax breaks and a higher limit for insured bank deposits in a bid to attract enough votes to reverse a shocking defeat in the House and send legislation to President Bush by the weekend.
After a day of behind-the-scenes maneuvering, top lawmakers said the Senate proposal would include a tax package that had been caught in a stalemate with the House, as well as a plan endorsed yesterday by both major presidential candidates and the Bush administration to raise government coverage for bank deposits.
"It has been determined, in our judgment, this is the best thing to move forward," Sen. Harry Reid, the majority leader, said in announcing the surprise move. "This is good for the country."
The senators issued no details of their proposal and said none would be available until today.
The lawmakers were gambling that the collection of popular tax breaks for businesses and alternative energy would appeal to lawmakers who helped sink the measure Monday in the House without driving off Democrats who have opposed extending the tax incentives without offsetting spending cuts elsewhere.
Connecticut Sen. Christopher J. Dodd, a Democrat and the chairman of the Senate banking committee, said the Senate decided to move quickly, citing signs from some House members that they regretted their initial vote after the markets plunged in response.
"I think their will is coming back, having heard from their constituents," he said.
Bush joined the two major presidential candidates, Sens. John McCain and Barack Obama, in calling for quick action to stabilize the markets and avoid what Bush characterized as the threat of "painful and lasting" damage to the economy.
On the morning after a Wall Street selloff, congressional offices reported a shift in angry calls from constituents, with some demanding that lawmakers take corrective action - a distinct change from the outpouring of public opposition that contributed to the defeat of the plan.
"I started hearing from a lot of people who lost money on their investments thanks to the big drop on Wall Street yesterday," said Rep. Steven C. LaTourette, an Ohio Republican who voted against the plan.
As they explored ways to tinker with the proposal in consultation with the administration, all sides agreed that any revisions would not change the underlying concept of granting the Treasury Department access to up to $700 billion to purchase - and eventually resell - troubled securities that are clogging the financial system.
The tax package would cost more than $100 billion and extend and expand many individual and business tax breaks, including credits for the production and use of renewable energy sources, such as solar and wind power. It would also extend the business tax credit for research and development, expand the child tax credit, protect millions of families from the alternative minimum tax and provide tax relief to victims of recent natural disasters.
Members of the House and the Senate say the bill would create tens of thousands of jobs and reduce the nation's dependence on foreign oil. But the two chambers have been at odds over whether and how to offset the cost of extending the many tax breaks.
The major obstacle has been Rep. Steny H. Hoyer of Maryland, the majority leader, and other centrist Democrats. Senate and House leaders had been debating whether the Senate, where support for the proposal runs deep, should vote first to provide some momentum for a second vote across the Capital Rotunda. Some senators were leery of going on the record if the bill could not prevail in the House, but others backed the idea of the Senate taking the lead.
"I would support the Senate going first, which we would be willing to do as early as tomorrow if that would make this process successful," New York Sen. Hillary Clinton said in a conference call yesterday.
With no vote in the House even possible before lawmakers reconvene tomorrow at noon, strategists for both parties spent yesterday poring over tally sheets from Monday afternoon's 228-205 outcome, trying to identify lawmakers who could be switched and what it would take to switch them.
But winning over some determined opponents was not going to be easy.
Democratic opponents said they would be willing to back an increase from $100,000 to $250,000 in the amount of a bank deposit that would be insured by the federal government, an idea that gained currency yesterday as a consensus change in the initial bailout plan.
Early yesterday, both Obama and McCain embraced the deposit insurance proposal, sparking a bit of a political tiff over who deserved credit for initiating it.