By Randy Wynn, CQ Staff

Congressional leaders quickly recognized that enacting an expensive plan to steady the financial industry shortly before an election depended upon convincing voters it was needed to save the economy rather than bail out Wall Street high-fliers.

And after the plan (HR 3997) suffered a shocking defeat on Monday in a House vote that triggered a record stock market decline, there was general agreement that it was the bailout label that had stuck.

From the beginning, President Bush, top administration officials, congressional leaders and both presidential nominees described the proposal, first unveiled Sept. 20, as necessary if unpleasant medicine for financial ills that threatened the well-being of every American family.

The White House recognized the bailout tag as its primary communications challenge in mustering support for the plan.

“I don’t think there’s any question that labeling this as a bailout for Wall Street executives makes it difficult for people to support it,” White House Deputy Press Secretary Tony Fratto told CNN after the vote.

Moments before the vote, House Speaker Nancy Pelosi , D-Calif., warned anew of the stakes. “We confront a crisis of historic magnitude that has the ability to do serious injury not simply to our economy, but to the American people; not just to Wall Street, but to everyday Americans on Main Street. This is a crisis caused on Wall Street. But it is a crisis that reaches to Main Street in every city and town of the United States.”

But so far, the sales effort has fallen flat with voters. Lawmakers’ offices were flooded with phone calls and e-mails from angry constituents, the public sentiment running overwhelmingly against the $700 billion purchase of financial institutions’ shaky assets. On Monday, two-thirds of Republicans bucked their leadership and voted “no.”

“We’re threatened with a shutdown of the credit system that would put great pain on people across the country in an economy that’s already weakened,” House Financial Services Chairman Barney Frank , D-Mass., said after the vote. “Maybe that’s wrong. Clearly, a large number of members of the House don’t believe that. . . . If we don’t act promptly around here, and effectively, then a lot of people are going to lose their jobs and Main Street is going to be put into dire straits.”

But as the White House and congressional leaders weighed their next move, opponents of the plan said the people had spoken.

“The American people said no, despite how much gloom and doom and uncertainty was thrown at them,” Rep. Thaddeus McCotter , R-Mich., told Fox News. “They said, ‘We do not like the fundamental concept of buying toxic assets out of the market with public money.’ ”

“The Wall Street fear machine is going to gear up and say the sky really is falling. Leadership’s going to meet, try to figure what they can do. And the only thing that I can say for certain is that if we pass a bill, it will be a better bill than this bill,” said Rep. Brad Sherman , D-Calif.

Administration officials and lawmakers had tried to convince average Americans that the bailout was in their interests.

A day after Treasury Secretary Henry M. Paulson Jr. briefed lawmakers on the administration plan Sept. 18, Bush said, “Problems that originated in the credit markets and first showed up in the area of subprime mortgages have spread throughout our financial system. This has led to an erosion of confidence that has frozen many financial transactions, including loans to consumers and to businesses seeking to expand and create jobs. As a result we must act now to protect our nation’s economic health from serious risk.”