Inhofe: Senate Will Likely Block Paulson’s Bailout

Fresh skepticism over the Bush administration’s $700 billion proposed bailout plan has moved at least one GOP senator to suggest the plan will be blocked in the Senate.

“There is a good chance it will be stopped,” said Sen. Jim Inhofe (R-Okla.), soon after Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke spoke before the Senate Banking Committee to lobby senators for support. Inhofe said he was still digesting the committee’s testimony, but said “my first reaction is not positive at all.”

Specifically, Inhofe said the plan’s cost and rushed timetable are leaning him against supporting it.

“Everyone’s in too big of a hurry,” he said. “There’s not a long history of success in bailouts.” Other Republicans, however, predicted the caucus will eventually climb on board the administration’s plan, even if it is modified.

“We have to do something,” said Sen. Robert Bennett of Utah, the Banking Committee’s second senior-most Republican. “Inaction is not an option. We have to do something, the only question is, ‘Is this the right something?'”

Democrats agreed they have more questions than answers about the plan, but that some type of action is necessary. Sen. Dianne Feinstein (D-Calif.), for example, said Paulson and Bernanke used “lightning rod” words in a Friday afternoon conference call with senators.

“I took notes on the conversation, and they used words like ‘full-scale panic,’ ‘the markets aren’t functioning,’ ‘stress in the credit markets,’ and ‘major meltdown,’ ” Feinstein said. “And there’s no example of a meltdown like this without a major recession. That indicated to me the gravity of the situation. Those words to me were lightning rods.”

–J. Taylor Rushing