Democrats: GOP opposition threatens deal

Congressional Democrats said a $700 billion rescue plan for the U.S. financial markets is teetering on collapse because of opposition from House Republicans.

Democrats emerged at 9:45 p.m. from a 75-minute emergency meeting Thursday between House and Senate leaders and Treasury Secretary Henry Paulson to report that House GOP members were refusing to participate.

{mosads}The charge came at the end of a whirlwind day in which House Republicans called for taking an entirely different approach — already rejected by the Bush Treasury Department — and Republican presidential nominee John McCain jumped into the delicate negotiations. Democrats lashed out at McCain for the “distraction,” accusing the Arizona senator of damaging progress on the bailout package talks.

Democrat negotiators at the end of the day said House Republicans’ opposition is directly threatening the chance of Congress approving the package. They called for a stepped-up lobbying effort from President Bush.

“Let this be a clear warning: The president and his party have got to decide whether they want to be a part of this,” said Senate Banking Committee Chairman Chris Dodd (D-Conn.). “We’re not going to come to conclusion on a three-legged stool here, missing a fourth leg.”

Dodd announced that negotiations would continue Friday morning and that legislative language is being drafted, in an effort to move talks beyond a broad, conceptual “agreement in principles” that emerged Thursday morning.

Dodd also noted that Bush stressed the gravity of the situation when meeting with congressional leaders on Thursday afternoon at the White House.

“If he feels that strongly about it, then he ought to get on the phone and talk to his House Republicans about showing up,” he said.

Congressional participants in Thursday night’s meeting were House Financial Services Committee Chairman Barney Frank (D-Mass.) Senate Budget Committee ranking Republican Judd Gregg of New Hampshire, Dodd and House Financial Services Committee ranking Republican Spencer Bachus of Alabama.

But it was Bachus whose input caused the most heartburn. He left the meeting twice, once after telling Paulson, Frank, Dodd and Gregg that he was only attending at the suggestion of House Minority Leader John Boehner’s (Ohio) office — not Boehner himself — and that he had no negotiating authority.

Bachus’s second departure was final, but came more than an hour before the end of the meeting.

Speaking briefly to reporters on his way from the room, Bachus said only that “anything is on the table” and that he hopes a plan is reached.

“It’s been frustrating,” he said of House Republicans’ opposition to the plan, before leaving without taking any more questions.

The meeting began with Paulson calling Democratic leaders ahead of time to insist that the meeting only have four participants: One each from the two political parties in both the House and Senate. That prompted several would-be participants to leave the meeting before it began.

Republicans have offered an alternative plan authored by conservative Republicans and endorsed by Boehner that would have Wall Street institutions buy insurance from the government for their distressed assets.

That’s very different than the plan that the Bush administration and Paulson had proposed, which was for the federal government to buy the toxic debt.

That is the outline that Paulson, Democrats and Senate Republicans had been working from for nearly a week, hashing out details for an oversight board and limits on CEO pay. On Thursday morning, Senate and House members met and announced a deal at a news conference, which sent markets soaring.

But House Republicans said they were not part of any deal, and Boehner released a statement denying the statements made at the press conference that there was a deal. Aides said Boehner “has not been part of the direct negotiations” even though he’d been issuing joint statements with Pelosi saying progress was being made on the legislation.

Boehner spokesman Kevin Smith said House Speaker Nancy Pelosi (D-Calif.) has not been directly involved, either.

“They have been getting regular updates from the principals," Smith said.

Pelosi told Bush and Paulson after the White House meeting that they needed to lobby House Republicans to get the bill through.

“They’re the only sticking point,” said Pelosi spokesman Brendan Daly. “Secretary Paulson talked to the speaker afterward and said he was going to have to talk to House Republicans about it.”

GOP support is crucial because Pelosi has said she will not even bring the bill up for a vote without “substantial” Republican support.

Dodd and Frank said the same, saving their harshest words for House Republicans starting with Bachus.

“This thing will go nowhere unless the president isn’t able to act like the leader of his party,” Frank said. “In fact I wish Senator McCain was being helpful, because Sen. McCain and the president between them ought to be able to get House Republicans to come back to the table.”

Dodd even signaled that Democrats themselves may even drop their participation if Republicans don’t cooperate with the White House’s calls for urgency.

“When House Republicans don’t participate, the question I’m clearly going to get from my Senate Democrats is, ‘What are we at the table talking, when the president’s own party represented by the other body refuses to even show up?’ “ Dodd said.

As Democratic criticism of McCain’s involvement in the bailout talks ramped up Thursday, Sen. Lindsey Graham (R-S.C.), a top ally of McCain, fired back by suggesting that Democrats set up McCain by falsely claiming a deal was in place and then pretending McCain had thrown it off-course.

"There was never a deal that had a snowball's chance in hell of passing. This is all politics,” Graham said. “If they'd spend half of the time sitting down and negotiating a deal rather than attacking Sen. McCain, we would be getting somewhere. What they've tried to do, in my opinion, is to throw something together before John got here for this very reason."

Jared Allen and Jackie Kucinich contributed to this story.