Democrats Hopeful House Will Pass Bailout Bill

House Majority Leader Steny Hoyer Thursday said he saw a good chance that the $700 billion financial industry bailout bill passed by the Senate will clear the House of Representatives this week.

"I think there's a good prospect of getting that done tomorrow," the Maryland Democrat told reporters.

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The Senate Wednesday passed a revised package with a strong bipartisan vote of 74-25, sending it to the House, which had rejected an earlier version of the bill on Monday.

The House vote sent stock markets into a tailspin with the Dow Jones Industrial Average tumbling a record 778 points in a matter of hours.

The bill would empower Treasury Secretary Henry Paulson to to buy mortgage securities and other financial instruments that have lost value because of the deteriorating housing and credit markets.

Hoyer said it was likely the House would not try to amend the Senate-passed bill, which also raises bank deposit insurance to $250,000 from $100,000 and includes a package of about $150 billion in tax breaks for renewable energy, businesses and individuals.

Congressional leaders were scrambling to shore up support in the House and a White House spokesman also expressed optimism about the legislation's prospects.

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However, the spokesman said that the overall economy faces "very severe" challenges that likely would extend into 2009.

New government data released Thursday showed jobless claims rose 497,000 last week. A more extensive report on U.S. unemployment last month will be released early Friday, which could further influence the House vote later in the day.

Support of Business Groups

The House vote, if it occurs on Friday, will come as public sentiment appeared to be shifting somewhat on the controversial bailout bill.

Hoyer said that prior to Monday's House vote on the previous version of the bill, calls flooding into the Capitol were running 6 to 1 against the bill. Now, Hoyer said, it was only 3 to 1 against the bill.

Hoyer also said new public opinion polls showed the public evenly divided now.

Besides House leaders working to round up the necessary votes for passage, business groups were urging their members to contact targeted lawmakers in hopes of getting them to add their support.

For example, the U.S. Chamber of Commerce was urging a "grassroots and grasstops" effort aimed at getting about three dozen House members, mostly Republicans, from several states to switch their votes from "no" to "yes." Hoyer said he did not think a significant number of the Democrats would change their "yes" votes cast on Monday to "no" on the Senate version.

"I think it is going to be minimal," Hoyer said when asked whether fiscally conservative Democrats might abandon the legislation.

Many Democrats are upset because the $150 billion in tax cuts added to the revised bill are not fully paid for by spending cuts or other revenue raising measures.

He reiterated that Republican leaders needed to deliver many more votes for the package than they did on Monday when roughly two thirds of Republicans in the House voted against the bill.

"Yes, we expect there to be many more Republican votes if we are going to pass this," Hoyer said.

Kevin Smith, a spokesman for House Minority Leader John Boehner, an Ohio Republican, said that Wednesday's Senate vote "was encouraging and we're moving in the right direction, but we're going to need more Democrat and Republican votes to pass this bill tomorrow."

One House Republican, Rep. Zach Wamp of Tennessee, announced on Thursday that he would support the new version of the bill, having voted against the first one.

Copyright 2008 Reuters. Click for restrictions.