The Senate Jumps The House

Senate leaders have decided not to wait for the House to produce a Wall Street rescue plan, so they are forging ahead with their own, setting a vote for Wednesday night.  The deal will include some controversial tax legislation as well, which could complicate matters.

So this could either be a stroke of genius, or a move that’s only going to inflame the usual tensions between the House and Senate.

The Wednesday night vote will draw Senators Obama, McCain and Biden back for the evening, as the plan should be easily approved.

The larger question again will be, what will the House do, especially with the tax plans.

First, let’s start with the biggest change to the bailout bill, which will increase FDIC government insurance limits for bank accounts from $100,000 to $250,000.

The argument in favor of that is that it gives investors more security and can convince people not to run to their bank – which might be in some financial trouble – and exacerbate that by pulling money out of the institution (a run on the bank.)

The change is backed by both Obama and McCain.  Ironically, Republicans wanted the increase as part of the original bailout bill, but it was not included.

The other items being put in this Senate bailout bill are related to a never-ending tax fight between the House and Senate.

Each body has been trying to get the other to accept a bill that mainly deals with the Alternative Minimum Tax, along with a series of expiring tax breaks for both individuals and businesses – known in the legislative parlance here as “tax extenders.”

The House has refused to go along with the bill unless it is fully paid for.  Senators in both parties have rejected that, which has led to months of deadlock.

This is a bid by Senators to basically jam their version of the AMT/Extenders bill down the throat of the House.

Like I said, this may only complicate the larger issue of the bailout bill, or the House could just roll over like a tired, old dog and accept it.

As I write this late on Tuesday night, it’s not clear if any other items have found their way into the Senate bill.  Something tells me it might not exactly show up on line anytime soon either, and may be malleable right up until the time it is offered on the Senate floor.

Stay tuned.