Berkley to make U-turn on bailout

By Lisa Mascaro

Friday, Oct. 3, 2008 | 2 a.m.

Democratic Rep. Shelley Berkley never expected to be one of the critical votes on the $700 billion bailout bill.

After voting against it Monday, she left the House floor early to catch a plane home. Rep. Rahm Emanuel, the Illinois Democrat who had been central to negotiations, ran after her.

Call me if you need me to U-turn back to the chamber, she told him. “I would not be the vote to submarine the bill,” she said she told him.

The bill fell 12 votes short, in a defeat that stunned Washington and Wall Street.

Berkley said Thursday she will vote yes when the bill comes up for a new vote, probably today.

The Las Vegas congresswoman said the seriousness of the nation’s financial troubles and the new bill’s extension of popular tax breaks persuaded her to drop her opposition.

“It’s been an eye opening few days,” Berkley said. “I hate this like poison, but I think relief is necessary.”

For Berkley and the other Nevada lawmaker who voted against the bailout, Rep. Dean Heller of Carson City, the stakes grew higher when the new bill passed by Senate included many sweeteners that are important for the state. (Republican Rep. Jon Porter was among 65 in his party to vote yes on Monday, and he plans to do so again.)

The bailout provisions mainly remain, but the new package includes the hugely popular extensions of expiring tax credits that need to be renewed before year-end or businesses and residents would unknowingly be hit with new taxes.

Nevada Republican Rep. Dean Heller also voted against the bill on Monday, saying that it bordered on socialism. His office declined to discuss the congressman’s position now as the do-over nears.

One provision added to the bill is particularly important in the rural parts of Heller’s district — extension of the federal payments in lieu of taxes. Rural counties rely on these funds because so much of their land is owned by the federal government and unavailable for economic development.

Among the other sweeteners that motivated Berkley is exemption from the alternative minimum tax, which would snare 138,000 middle-class Nevadans with that tax if it were not renewed.

There is also a provision that allows residents in states such as Nevada that have no state income tax to deduct state and local sales taxes on their federal returns.

For businesses, the bill includes the renewable energy tax credits that have been the No. 1 lobbying issue for solar, wind and geothermal companies. Berkley said Nevada is ripe for green energy investments, but companies say that without tax breaks, they will have to close up and eliminate jobs.

Small-business owners would continue to get tax breaks for opening restaurants. Film companies would get continued breaks for producing movies and television shows domestically.

Closer to kitchen table politics, the bill includes a child income tax credit, a $1,000 homeowner deduction for families that don’t itemize their deductions and a credit to reimburse teachers $250 for out-of-pocket spending for school supplies.

It’s a package that is tough for lawmakers to refuse.

The House and Senate were at odds over the tax extension package for months, because some House Democrats believe it must be fully paid for — which means new taxes that Republicans generally oppose.

By putting it on the bailout bill, Senate Majority Leader Harry Reid saw a chance to both win Republican bailout votes and pass the deadlocked tax package.

Berkley said Democratic leadership has not been arm-twisting to get her to change her vote. She has had just one call from a fellow lawmaker asking her thoughts.

Reid did not call her, saying he had his hands full in the Senate and “she doesn’t need me talking to her.”

Republicans are under greater pressure to produce votes. Their members voted against the bill 2-to-1 on Monday in what was expected to be a bipartisan compromise.

Heller’s office declined to discuss whether he had received calls from the White House or Republican presidential candidate John McCain, as other lawmakers have.

Heller had staunchly opposed the bailout, and was not among those being mentioned by Republicans as a lawmaker who might switch.