Democrats and many Republicans were pushing for quick approval of the bill, which would allow the government to back $300 billion in new, cheaper mortgages for debt-ridden homeowners facing foreclosure.
But negotiations to complete the measure hit a snag over a bid by Sen. John Ensign, R-Nev., to add a $6 billion package of tax breaks for renewable energy producers. The incentives have bipartisan backing, but Democrats oppose including them without balancing them with tax hikes to prevent an increase in the deficit.
The stalemate contributed to a pre-vacation Senate traffic jam of high-profile legislation awaiting completion, including the broad housing package, a terrorist surveillance bill, and bills to fund the Iraq war and avert Medicare cuts.
Senate Majority Leader Harry Reid, D-Nev., said he was determined to complete the housing measure - which also includes long-awaited overhauls of the Federal Housing Administration and Fannie Mae and Freddie Mac, the government-sponsored mortgage giants - before lawmakers departed.
"I'm stymied," said Sen. Christopher J. Dodd, D-Conn., the Banking Committee chairman. "We need to finish this before we leave here. We'll do it the hard way or the easy way."
The mortgage aid plan would let the FHA insure home loans for an estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for safe, fixed-rate mortgages. Mortgage holders would first have to agree to take a loss on the existing mortgages. They would have a powerful incentive to do so in many cases, given that a government-backed refinance could allow them to recover more money than they would in a costly foreclosure.
The package cleared a key hurdle Tuesday when the Senate voted overwhelmingly to speed its consideration. It faces more obstacles, including a threatened veto and differences among Democrats about key details, but negotiators said those differences were narrowing.
Congressional leaders are still divided, however, on how high to place loan limits that apply to the FHA and Fannie and Freddie. The Senate bill sets those limits at $625,000 while a House-passed version puts them at $730,000 - a crucial difference in high-cost housing markets like California, home to House Speaker Nancy Pelosi.
Lawmakers have been negotiating behind the scenes with the Bush administration to avert a veto. White House spokeswoman Dana Perino noted that the measure passed the House lacking enough votes to override a veto. "So I think that congressional leaders have every reason in the world to try to work this out ... in a way that they can get a bill to the president that he could sign," Perino said.
The latest Senate hang-up provided more time for foes of the housing measure to try to drum up opposition.
Rep. John A. Boehner, R-Ohio, the House minority leader, called on Rep. Barney Frank, D-Mass., to hold a hearing investigating allegations that Dodd and Sen. Kent Conrad, D-N.D., got preferential mortgages at the behest of Countrywide Financial Corp.
CEO Angelo Mozilo. Countrywide, a leading subprime lender that has been blamed for helping to cause the mortgage meltdown, is among those that could benefit from the housing rescue.
"Democrats who receive sweetheart deals from their campaign contributors shouldn't be pushing legislation forcing taxpayers to bankroll a $300 billion bailout of scam artists and speculators, and the American people have every right to demand answers if they do," Boehner said in a statement.
Frank, the House Financial Services Committee chairman, has declined to start such a probe, saying his panel is too busy and citing a pending Senate Ethics Committee investigation.
In efforts to defuse the flap in the Senate, Ethics Committee Republicans and Democrats are proposing adding mortgage disclosure requirements for members of Congress to the housing bill. The proposal by John Cornyn of Texas, the panel's senior Republican, and Barbara Boxer, D-Calif., the chairman, would remove an exception that currently allows lawmakers to omit home mortgages from their annual financial disclosures.
