Washington, D.C. On a single day filled with staggering sums, the Obama administration, Federal Reserve and Senate attacked the deepening economic crisis Tuesday with actions that could throw as much as $3 trillion more in government and private funds into the fight against frozen credit markets and rising joblessness.
“It’s gone deep. It’s gotten worse,” President Barack Obama said of the recession at a campaign-style appearance in Fort Myers, Fla., where unemployment has reached double digits. “The situation we face could not be more serious.”
If any more emphasis were needed, Wall Street investors sent stocks plunging, objecting that new rescue details from the government were too sparse. The Dow Jones industrials dropped 382 points.
The president spoke shortly after Senate passage of an
$838 billion emergency economic stimulus bill cleared the way for talks with the House on a final compromise. In a display of urgency, White House chief of staff Rahm Emanuel traveled to the Capitol for meetings that stretched into the night with Democratic leaders as well as moderate senators whose views — and votes — will be key to any deal.
Separately, Treasury Secretary Timothy Geithner outlined plans for spending much of the $350 billion in financial bailout money recently cleared by Congress, and the Federal Reserve announced it would commit up to $1 trillion to make loans more widely available to consumers.
Taken together, the events marked at least a political watershed if not an economic turning point — the day the three-week old administration and its congressional allies assumed full control of the struggle against the worst economic crisis since the Great Depression.
The vote was 61-37 in the Senate to pass the stimulus, with moderate Republican Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania joining Democrats in support.
Even before the vote, Majority Leader Harry Reid and House Speaker Nancy Pelosi met with Obama at the White House to go over the task ahead.
The Democratic leaders have long pledged to have legislation on Obama’s desk by mid-month, and some Democrats said there was an informal target of today for agreement on a bill that would likely wind up in the range of $800 billion.
The political urgency bumped up against other obstacles, though.
The House measure includes roughly $70 billion more spending than the Senate’s, but it lacks Senate-approved tax breaks totaling more than $100 billion for new car buyers, home purchasers and upper middle income families.
In a further obstacle, Collins and other Senate moderates — in both parties — signaled they will work to hold the cost of the final bill below $800 billion. That’s less than the $820 billion in spending and tax cuts combined in the bill that cleared the House as well as the $838 billion legislation the Senate wrote.
Additionally, Obama has campaigned particularly energetically to include funds for school construction in the bill. At the insistence of Collins, the Senate measure omitted money for that purpose, and it wasn’t clear whether she had eased her position on the presidential priority.
Whatever the cost of the final bill, it will add to the deficit, and that created another little-mentioned dilemma for the administration and Democrats.
Future spending bills on domestic programs or tax cuts will probably have a far more difficult time gaining the support necessary to pass without offsetting spending cuts or tax increases that would hold the deficit level.