BLUE BELL, Pa. -- Sen. John McCain (R-Ariz.) today proposed $52 billion worth of tax breaks aimed at reducing the impact of stock market losses on the nation's seniors, providing relief to the unemployed and encouraging savings.

Under his plan, unveiled as he campaigned in a suburb of Philadelphia, seniors would pay lower taxes when they tap their retirement accounts and people who sell falling stocks could write off more of their losses.

Those who are out of work would no longer be taxed on the unemployment benefits they collect. And those who make a profit by selling long-held stocks would pay only half the capital gains taxes for the next two years.

"I will help to create jobs for Americans in the most effective way a president can do this -- with tax cuts that are directed specifically to create jobs and protect your life savings," McCain said to a crowd of about 1,000 people at the Montgomery County Community College.

-- By Michael D. Shear

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In a statement released moments ago by Senate Majority Leader Harry Reid (D-Nev.), he echoed calls by House Speaker Nancy Pelosi (D-Calif.) for an economic stimulus plan aimed at Main Street, now that the Wall Street bailout/rescue plan apparently is underway.

"Congress will review the details of the Administration's new strategy to address concerns about whether it sufficiently protects taxpayers, avoids unnecessary windfalls for CEO's, and attacks the underlying causes of the crisis," Reid said.

"In any case, it is clear that the administration's plan does not go far enough to address the severe challenges facing our economy and America's middle class. Democrats have worked for months to reinvigorate our economy and provide economic security for families, while Republicans have blocked our efforts," Reid said. "We hope our Republican colleagues now will join us to ensure quick action on such a plan."

-- Paul Kane

Congressional leaders offered bipartisan praise for today's actions, saying that Treasury Secretary Hank Paulson was taking steps that he initially resisted but were pushed early by House and Senate negotiators.

House Speaker Nancy Pelosi (D-Calif.) called the joint announcements "steps in the right direction that could help restore confidence" in the markets.

"From the first days of negotiations on the Emergency Economic Stabilization Act, Congress demonstrated bipartisan support for direct injections of capital into troubled financial institutions, even though the administration's preferred approach was primarily to purchase troubled assets," Pelosi said in a statement. "The decision of President Bush and Secretary Paulson to take the critical step of direct purchases of preferred stock in financial institutions will, if conducted correctly, protect the interests of taxpayers."

House Minority Whip Roy Blunt (R-Mo.), the lead House GOP negotiator, also expressed support for the actions, suggesting that House Republicans supported taking stakes in the banks and firms as a way to immediately provide capital while also creating "an almost certain guarantee" that the federal government would recoup its expenditures.

"This is an opportunity that the administration didn't really initially ask for," Blunt said in a conference call with reporters.

While acknowledging some conservatives might oppose the idea of a partial nationalization of banks, Blunt said that the limitations of a 15 percent stake should more than satisfy those wary of too much government influence in the private markets.

He noted that "the stake is not nearly as large" as the bank takeovers happening in parts of Europe.

-- Paul Kane

Banks participating in the federal rescue program announced today must abide by stricter restrictions on executive pay than Treasury officials first indicated were required under the legislation.

The new restrictions include some of the toughest requirements spelled out by Congress.
The plan's new rules require that participating banks take back executive bonuses if they were based on misstated earnings; it forbids the payment of golden parachute payments to senior executives; and prohibits incentive pay that encourages "unnecessary and excessive risks."

The rules issued by Treasury also preclude participating banks from deducting from taxes executive salaries in excess of $500,000 per executive.

One of the key sticking points in the congressional negotiations over the $700 billion rescue plan was how much financial institutions who receive federal help should be required to limit executive pay.

These provisions were among the last to be settled during negotiations between lawmakers and Treasury Sec. Hank Paulson, who was resistant to placing limits on executive pay.

As recently as late last week, Treasury officials had argued privately that the legislation required only "minimal" restrictions on executive pay and told congressional staffers that there was "wiggle room" under the new law.

Sen. Charles E. Schumer (D-NY), who had pressed for stricter limits on executive pay, expressed cautious optimism in a statement after the new rules were announced.

"They could have gone either way on how to restrict executive compensation," Schumer said. "They made the right decision by using the stronger guidelines. Now we look forward to seeing exactly how those guidelines get implemented."

--Peter Whoriskey

PepsiCo. which, like Coca-Cola, has long been considered a "safety stock" -- in good times or bad, folks drink soda -- said this morning that people actually aren't drinking soda. Result: The company will cut 3,300 jobs in the United States.

The company's stock is being hammered thanks to a trifecta of bad news from the soda giant this morning: Third-quarter profits fell short of Wall Street expectations, the company cut its full-year outlook and it refused to give guidance for 2009.

Nearing lunchtime, shares of PepsiCo. are trading down about 10 percent. It is the nation's No. 2 soda company behind Coke.

The company said the job cuts are part of a plan to save $1.2 billion over the next three years.

Soda only makes up about 25 percent of PepsiCo.'s sales. The company owns a wide array of snack foods, including Lay's, Frito-Lay's, Doritos, Cheetos and Ruffles.

Third-quarter sales in the Frito-Lay division were up 9 percent, but soda sales were down 3 percent and non-soda sales -- such as Gatorade -- were down 5 percent, the company reported.

-- Frank Ahrens

Oh, this is good: Variety reports this morning that 20th Century Fox is fast-tracking a sequel to "Wall Street," Oliver Stone's 1987 film that introduced super-trader Gordon Gekko and his signature line -- "greed is good" -- into the culture.

The sequel's plot so far: Gekko is finally released from prison after his various nefarious activities and reenters a Wall Street radically different from the one he left.

The studio hopes Michael Douglas will reprise his role as Gekko, but the star is not formally attached to the project yet, Variety reports.

The mind reels with possibilities. What will 2009 Gordon Gekko be like? This is a man who epitomized, at least in Stone's perspective, the epitome of go-go, '80s rapacity. This is the man of whom it was asked: "How many yachts can you water ski behind?" Which is a terrific image.

Who would win in a steel-cage death match? Gordon Gekko or Hank Paulson?

Or will Gekko have gone soft? Will he become an eco-investor? "What I actually meant to say 20 years ago," Gekko may say, "is that green is good," one of our newsroom colleagues joked moments ago.

-- Frank Ahrens

As if on cue, the Dow turned negative for the first time this week just as FDIC Chairman Sheila Bair, appearing CNBC moments ago, said that "the markets are responding" well to Treasury's nationalization plan for U.S. banks that was announced this morning.

There have been worries all day yesterday and into today that this is not a real rally.

Heading into the 11 a.m. trading hour, the Dow was trading about even, well off its bolt-out-of-the-gates 300-point rally.

The S&P 500 has dipped a toe into negative territory, down less than half of a percent, but the Nasdaq, which has ignored the rally all day, is down more than 2 percent.

Why are tech stocks so bad? Because tech companies, like Apple and Microsoft, depend on consumer spending, which is being squeezed by the ongoing recession. Not to mention the pending gloomy holiday spending season. There could be a lot fewer iPods under Christmas trees this year.

-- Frank Ahrens

Lawmakers are beginning to release statements on Treasury's plan, reported in The Post this morning, to partially nationalize major U.S. banks in an effort to stabilize the economy.

We are looking forward to statements from the most conservative Republicans and Democrats on the partial government takeover of banks.

"The actions announced today by Treasury Secretary Hank Paulson to inject capital directly into the banking system by purchasing dividend-paying preferred stock and expanding F.D.I.C. insurance to cover small businesses' bank accounts are bold, aggressive, and necessary," said Sen. Judd Gregg (R-N.H.), one of the architects of the $700 billion Wall Street rescue/bailout plan.

"These necessary steps, coupled with the huge commitment of resources by the European nations to their financial system, will help us avoid what could potentially be a catastrophic economic meltdown," Gregg said.

"No one is excited by the need to pursue this course, but it is the right action needed at this time, and it will move us a long way down the road towards stabilizing our credit markets, restoring our economy, and protecting the jobs and retirement savings of the American people," Gregg added.

"Hopefully, this strong approach is the dynamite needed to blast through the clogged-up financial system," said Sen. Chuck Schumer (D-N.Y.). "Once that is accomplished, we must make sure that this new capital is used to strengthen traditional banking practices to get the economy going again. There must be checks to prevent these dollars from being used to increase executive compensation, pay out dividends, or bankroll exotic financial instruments.

"The Treasury plan gets great marks on the first, a passing grade on the second, and an incomplete on the third," Schumer said.

Rep. Spencer Bachus (R-Ala.) applauded the nationalization and said attention should now be turned to mark-to-market accounting and short-selling.

"While it is also recognized that mark-to-market was a well intentioned attempt to address the abuses of Enron, WorldCom and others, the negative consequences in a market that is not functioning normally negate the benefits," he said. "The suspension of mark-to-market accounting would be unwarranted in a normally functioning market environment. In a full blown crisis, some alternative ought to be available to allow our financial institutions to value assets based on a reasonable expectation of anticipated payoff."

-- Lori Montgomery

The Dow shot above 300 points in the first few moments of trading today and, as of about 10 a.m., is up about 180 points, or more than 2 percent.

The S&P 500 is up nearly 2 percent. The tech-heavy Nasdaq is the laggard in today's early rally, fluctuating above and below water.

Yesterday, the Dow closed up 9 percent, the largest one-day gain in the market's history.

What's the legitimacy of the week's rally so far? On the floor of the New York Stock Exchange, CNBC's Bob Pisani said traders are facing a choice today: Do they continue to go along with the rally and buy all day or do they sell into the rally in the middle of the day?

Let's move away from the spectacle that is Wall Street for a moment and focus on the underlying problem in the current financial crisis: the freezing up of the credit markets.

Because we've gotten used to not trusting any good news until it plays out, we offer a wait-and-see attitude on this piece of data: The three-month LIBOR -- or the London Interbank Overnight Rate, the interest rate banks charge when lending to each other -- is at its lowest rate since March.

The LIBOR had soared because banks did not trust other banks to repay loans.

What does the dropping LIBOR rate mean? It means, like frozen pipes in winter, the ice may be beginning to thaw and a trickle of water is starting to drip from your kitchen faucet.

-- Frank Ahrens