Senate To Vote On Revised Bailout Tonight

In an effort to peel off the votes required in the House of Representatives to get the $700 Wall-Street bailout passed, Senate Majority Leader Harry Reid (D-NV) has formed a compromise with Minority Leader Mitch McConnell (R-KY) that would add potentially contentious tax cuts to the bill, while raising federal deposit insurance limits to $250,000.

Both Barack Obama and John McCain have called for increasing the maximum on the FDIC insurance, which would raise that limit from $100,000 and do more to protect Americans' bank accounts.

The legislation is scheduled for a 7:30 PM vote on Wednesday with Obama and Joe Biden indicating that they will return to Capitol Hill for the vote.

The Senate bill follows a record drop of 778 points in the Dow Jones industrials on Monday after the House rejected the White House's bailout package.

More from the Associated Press on today's Senate vote:

The goal is to net at least 12 more House votes than the rescue proposal received Monday, when lawmakers rocked the political and financial worlds by rejecting it.

The gambit is certain to anger some conservative House Democrats, who object to tax cuts that are not offset with spending cuts. But Senate strategists assume it will gain more House votes than it will lose.

If so, Congress would be poised to pass landmark legislation giving the government billions of dollars to buy deeply discounted mortgage-backed securities that are choking off credit and roiling the markets.

The strategy is risky because some House members might see it as a high-handed move by senators. Senate passage of a bailout measure has seemed assured all along. The showdown is in the House, but now the Senate is trying to force the House's hand.

John McCain, of course, focused on the financial institutions themselves saying we should "…not call it a bailout, let's call it a rescue," while Obama kept his eye on working families, maintaining that increasing the FDIC maximum will make banks more secure for families and restore public confidence in the banking system.

Meanwhile, Senator Bernie Sanders (I-VT) who has been a foe of bailing out Wall Street, said yesterday that this plan should not be shouldered by the tax-paying middle class "…given the fact that the middle class is declining while the wealthiest people in this country have made out like bandits during the years President Bush has been in office.”

Sanders has argued -- to Treasury Secretary Henry Paulson and others -- that those who caused the problem and stand to benefit the most from a government rescue should be the ones to pay for any bailout. The senator has suggested a five-year, 10 percent surtax on individuals making more than $500,000 a year and couples with incomes of more than $1 million. The surtax would yield $300 billion to cover losses the government could incur when it resells troubled mortgages it acquires from banks.

And Sanders added that if this $700 billion is really required, “let Mr. Paulson and his friends pay for it, not people making $30,000 a year.”

Stay tuned…