Contractor associations hailed passage and signing of the rescue plan and said their members were feeling the pinch of frozen credit and overall pessimism.
Just four days after the House rejected a $700-billion federal buyout of ailing financial securities, the chamber approved an expanded plan with $110 billion tax breaks and other provisions the Senate added. Shortly after the House cleared the bill on Oct. 3 by a 263-171 vote, it was transported to the White House, where President Bush signed it into law.
Supporters hope that the new package, will clean up banks' balance sheets and prompt lenders to ease credit before widespread trouble in the construction industry grows worse.
Stephen E. Sandherr, CEO of the Associated General Contractors, said, "In the last week, AGC members generated an unprecedented number of letters to their senators and representatives because congressional inaction was affecting their businesses."
Bill Fairchild,the Associated Builders and Contractors' national chairman and president of R.W Murray Co., Manassas, Va., said, "We hope this bill will restore investor confidence on Wall Street and boost one of the few sources of meaningful economic expansion in the U.S.--commercial construction."
Lawmakers pointed to several factors behind the turnabout in the bill's fortunes. The Senate's addition of a provision doubling the maximum level of deposits that the Federal Deposit Insurance Corp. would guarantee had "a very substantial impact" in picking up votes, said House Financial Services Committee Chairman Barney Frank (D-Mass.).
The addition of tax breaks, however, was a "mixed blessing," Frank said. It won over some who voted "no" four days earlier, but also lost some "yes" voters, who wanted to see all the tax breaks offset by revenue-raising provisions. Under the bill, only part of the tax incentives' cost is offset.
Rep. Rahm Emanuel (D-Ill.) also said that his party's presidential nominee, Sen. Barack Obama (Ill.), called House lawmakers to encourage them to vote for the bill.
But the major factor behind the pickup in support, Frank said, was "the economic reality ant the way that translated politically." After the House voted down the earlier version of the bill, and the stock market tumbled and credit stayed tight, lawmakers received many calls and messages from businesses and other constituents urging them to support the new measure.
The package provides authority for the Treasury Dept. to pay up to $700 billion, not only for "troubled" mortgages and related securities but also "any other financial instrument" whose purchase the Treasury deems "necessary to promote financial market stability." The aim is that by having selling those poor-quality assets, that would prompt the banks that owned them to extend more credit.
The administration's original Sept. 19 proposal would have provided all the $700-billion authority right away, but the final bill releases it in installments: $250 billion on enactment, plus another $100 billion if the President requests it, and another $350 billion later, unless both Houses of Congress disapprove it.
Treasury Secretary Henry M. Paulson, Jr., said, "We will move rapidly to implement the new authorities, but we will also move methodically. In addition, the measure extends a variety of tax breaks for renewable energy and conservation that had been slated to expire on Dec. 31, including an eight-year extension for the credit for solar energy facilities.
It also extends the deduction for energy-efficient commercial buildings to the end of 2013 and the credit for energy-efficient new homes to the end of 2009.
The tax title of the bill also shields millions of Americans from having to the pay the alternative minimum tax this year. That provision affects not only individuals but companies categorized as partnerships or S corporations, which are taxed at individual, not corporate, rates.