WASHINGTON — The prospects for a bill that would extend a program that provides a federal guarantee for certain business deposits are rapidly fading as Republicans prepare to offer a point of order designed to kill the measure.
Although the situation remains in flux, Senate Republicans are expected as early as Thursday to file an objection to the bill based on its projected cost to the government. The Congressional Budget Office said in a report Monday that extending the Transaction Account Guarantee for two years could cost $110 million over the next 10 years.
That conclusion provides an opening for GOP lawmakers to argue that they do not object to the underlying bill, which is a top priority of community bank groups, but instead are concerned about increased government costs. If Republicans file a point of order, it would take 60 votes to waive it to proceed forward with the bill — a threshold supporters of the bill are unlikely to achieve.
Still, the dynamics of the bill are rapidly changing. Following are the three most likely scenarios for how the fate of the bill may be decided over the next few days:
Option #1: The point of order stops the bill
The bill to extend TAG has essentially become a political game between Republicans and Democrats at this stage. Neither side sees its odds of success as very high, but many Republicans would like to avoid making an uncomfortable vote against it for fear of alienating community bank supporters. Democrats, in turn, are using the bill as an opportunity to divide the GOP caucus.
The point of order would take place before a procedural vote to end debate on the bill and a final vote. Under Senate rules, a bill must not incur new costs to the government but instead be paid for in some manner. Democrats argue that the bill is paid for, since the Federal Deposit Insurance Corp. assesses premiums to pay for the added coverage. But the CBO concluded that the FDIC "would underestimate probably losses when setting fees to charge for this additional coverage." As a result, the CBO concluded that a large bank failure with significant deposits covered by TAG would end up costing the government more than $100 million over 10 years.
The CBO score gives the Republicans plenty of political cover to oppose a bill. Potential supporters of the legislation will also likely note that Senate Majority Leader Harry Reid prevented the GOP from fixing the problem because he made a procedural move this week that prevents lawmakers from adding amendments to the legislation. As a result, lawmakers can't make any changes.
Republicans are expected to uphold the point of order, opposing the bill not on the basis of the underlying extension of TAG, but its potential overall cost.
This is the most likely outcome at this stage.
Option #2: Republicans forgo the point of order, but don't allow cloture
Even if the Republicans decided not to offer the point of order — or voted to waive it once it was offered — they could still stop the bill by opposing a second cloture vote to end debate. Such votes require 60 votes to pass, with the Democrats only holding 53 seats.
Yet this tactic carries significant risk for the GOP, and makes it far less likely Republicans will employ it. Democrats are considering changing the rules of the Senate to make it harder for the minority party to filibuster a bill. On Tuesday, Democrats repeatedly took to the Senate floor to argue that the current filibuster rules have created gridlock that does not allow Congress to function properly.
Some industry observers suspect that Democrats were trying to use the TAG vote to force Republicans to effectively filibuster it by denying it a cloture vote. Reid and others could then use it as a case in point for the need for filibuster reform.
But Republicans are very aware of the potential risks here, making it more likely they will seek another method to stop the legislation.
Option #3: Republicans support the bill, knowing it faces long odds in the House
With community banks pressing for action on TAG, many Senate Republicans are inclined to at least publicly support the legislation, allowing it to pass the chamber. They know that House Republican leadership, including Majority Leader Eric Cantor, have said they do not support the bill, making it unlikely it will be enacted.
Under this theory, Senate Republicans get a "freebie," allowing them to get credit with banks for supporting TAG but not actually having to see it enacted.
But allowing a bipartisan vote out of the Senate could backfire. For one, it would put pressure on House Republicans to do act accordingly, even if they don't want to. For another, it makes it likelier that a TAG extension could be added to a separate piece of legislation, such as a possible fiscal cliff fix.
The latter approach may still be banks' best chance of extending TAG. If Democrats can successfully add the bill to a deal on the fiscal cliff, it would make it hard for Republicans to oppose.