In a decisive and hard-fought victory for President-elect Barack Obama, the Senate cleared the way today for Obama's incoming administration to spend the second $350 billion of the Troubled Asset Relief Program.
A measure to block the funds was voted down 42 to 52 after an intense lobbying campaign by the Obama economic team and by Obama himself.
Just hours before the vote, Obama economic adviser Larry Summers wrote a letter promising the Senate that the Obama administration would take specific steps to ensure the money is spent more responsibly and with more transparency than the Bush Administration spent the first $350 billion in TARP cash.
Obama also telephoned several senators before the vote, offering his personal assurances that the money would be used for its intended purposes of freeing up the credit markets and addressing the foreclosure crisis.
It was a tough sell. The bailout program has never been popular, and there has been widespread outrage in Congress over the way the Bush administration has spent the first $350 billion.
Six Republicans voted to release the funds, including Sen. Jon Kyl of Arizona, the No. 2 Republican in the Senate.
"I know that this is not a popular decision," Kyl said. "But I believe in the long run this program will help to keep our economy from collapsing. It will eventually help it to recover and that will benefit every Arizonan and every American."
But the overwhelming majority of Republicans, and eight Democrats, voted to block the funds.
"Americans intuitively know that what we're doing here is wrong," said Sen. Jim DeMint, R-S.C.. "All of us know that we have to pay it back, our children, our grandchildren, for generations to come, with a lower standard of living and incredibly high taxes and a devalued currency."
In a stark change from his position just three months ago, Sen. John McCain, R-Ariz., who had suspended his presidential campaign to help pass the TARP program in the first place, also voted to block the funds.
Obama's personal lobbying efforts were decisive for many Democrats.
"I will vote for this and I will do it because of the assurances I got from the president-elect himself that it will be different, that he will use these funds judiciously," said Sen. Barbara Boxer, D-Calif.
"I felt a little bit like after the last one, like Charlie Brown and Lucy," said Sen. Tom Harkin, D-Iowa. "You know she's always pulling the football from under Charlie Brown. Well, Lucy's 's not holding that ball any more. We have someone new holding that ball. Somebody named Barack Obama."
To get a sense of how close Democrats expected the vote to be, they swore in Roland Burris, D-Ill., at 2 p.m., and Vice President-elect Sen. Joe Biden delayed making his Senate resignation effective until 5 p.m., shortly after the vote was scheduled to be taken.
Earlier in the month, Democratic senators had vowed to block Burris from replacing Obama in the Senate because he was appointed by Illinois Gov. Rod Blagojevich who is charged with corruption, including an allegation that he tried to "sell" Obama's seat to the highest bidder.
To deny Obama the money, both the Senate and House would have had to reject the request. With Senate approval, the president-elect is assured of receiving the money available when he takes office next Tuesday.
House Democrats Unveil $825 Billion Stimulus
The vote on TARP is the first step in Obama's trillion dollar plan to revitalize the economy.
His team unveiled an $825 billion stimulus plan today that is larger than what he had publicly suggested in recent weeks. It is a combination of tax breaks and public works spending.
Senate Democrats are fashioning their own version of the rescue plan. While Republicans have been warm about Obama's mix of tax breaks, they did not like what they saw today.
"Oh my God," exclaimed House Minority Leader John Boehner, R-Ohio.
"There was no Republican input at all involved in what House Democrats outlined today," he said.
"I just can't tell you how shocked I am at what we're seeing," Boehner said. "You know it's clear that they're moving on this path along the flawed notion that we can borrow and spend our way back to prosperity."
ABC News Dean Norland contributed to this report