Hope reviving for a bailout

The move to add a tax legislation — including a set of popular business tax breaks — risked a backlash from House Democrats insisting they be paid for with tax increases elsewhere.

But by also adding legislation to prevent more than 20 million middle-class taxpayers from feeling the bite of the alternative minimum tax, the step could build momentum for the financial rescue from House Republicans.

The House could take a new crack at the plan before the week is out.

Senate and House leaders, President Bush and the two rivals to succeed him all rummaged through ideas new and old on Tuesday, desperately seeking ideas that might appeal to enough lawmakers to reverse the outcome and pass the plan.

Besides the proposal to expand federal deposit insurance, aimed at helping small businesses as well as individual savers, there was talk of making it easier for financial institutions to hold questionable long-term assets. That is an idea embraced by some of the House Republicans who slapped down the bailout bill on Monday.

Congressional leaders hope the half-dozen changes under discussion will be enough to persuade as few as six House Republicans and six Democrats to undo Monday's stunning 228-205 vote.

With the Capitol largely quiet Tuesday because of the Jewish new year, no overall plan appeared to jell just yet.

Banking Committee Chairman Christopher Dodd, D-Conn., told reporters, "I'm told a number of people who voted 'no' yesterday are having serious second thoughts about it." He added, however, "There's no game plan that's been decided."

The idea drawing the biggest support was to raise the federal deposit insurance limit, now $100,000 per account, to $250,000. Several officials, including presidential nominees John McCain and Barack Obama, endorsed the change.

So did the agency that runs the program.

Within hours of the candidates' separate statements, Federal Deposit Insurance Corp. Chairwoman Sheila Bair asked Congress for temporary authority to raise the limit by an unspecified amount. That could help ease a crisis of confidence in the banking system, Bair said.

She said the overwhelming majority of banks remain sound but an increase in the cap would help ease a crisis of confidence in the banking system as well as encourage banks to begin more lending.

Other ideas include extending unemployment insurance benefits, typically a Democratic goal but one that appeals to some Rust Belt Republicans. Another Democratic-backed idea would double the property tax deduction taken by people who do not itemize their taxes. And another calls for more spending on transportation infrastructure projects, which would create more jobs. But budget hawks in both parties might object.