The Bailout Bill Heads to the House

As you folks know, I've broken down the 450 page bailout bill into its constituent parts, and only the first the 110 odd pages actually relate to the bailout. The additional 340 pages deals with issues that Congress had not addressed during its current session.

It's therefore instructive to know how and why they were added to the bill.

It is to ensure that the bailout gets approved.

After all, who wants to go on the record saying that the opposed the AMT revisor that increases the level at which the alternative minimum tax starts? Who wants to go on the record opposing Hurricane Ike relief aid?

When you take a closer look at the tax extender portion of the bill, you see that there is literally something for everyone:

Sec. 101. Renewable energy credit.
Sec. 102. Production credit for electricity produced from marine renewables.
Sec. 103. Energy credit.
Sec. 104. Energy credit for small wind property.
Sec. 105. Energy credit for geothermal heat pump systems.
Sec. 106. Credit for residential energy efficient property.
Sec. 107. New clean renewable energy bonds.
Sec. 108. Credit for steel industry fuel.
Sec. 109. Special rule to implement FERC and State electric restructuring policy.
Subtitle B—Carbon Mitigation and Coal Provisions
Sec. 111. Expansion and modification of advanced coal project investment credit.
Sec. 112. Expansion and modification of coal gasification investment credit.
Sec. 113. Temporary increase in coal excise tax; funding of Black Lung Disability
Trust Fund.
Sec. 114. Special rules for refund of the coal excise tax to certain coal producers
and exporters.
Sec. 115. Tax credit for carbon dioxide sequestration.
Sec. 116. Certain income and gains relating to industrial source carbon dioxide
treated as qualifying income for publicly traded partnerships.
Sec. 117. Carbon audit of the tax code.

Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol
plant property.
Sec. 202. Credits for biodiesel and renewable diesel.
Sec. 203. Clarification that credits for fuel are designed to provide an incentive
for United States production.
Sec. 204. Extension and modification of alternative fuel credit.
Sec. 205. Credit for new qualified plug-in electric drive motor vehicles.
Sec. 206. Exclusion from heavy truck tax for idling reduction units and advanced
insulation.
Sec. 207. Alternative fuel vehicle refueling property credit.
Sec. 208. Certain income and gains relating to alcohol fuels and mixtures, biodiesel
fuels and mixtures, and alternative fuels and mixtures treated as qualifying income for publicly traded partnerships.
Sec. 209. Extension and modification of election to expense certain refineries.
Sec. 210. Extension of suspension of taxable income limit on percentage depletion
for oil and natural gas produced from marginal properties.
Sec. 211. Transportation fringe benefit to bicycle commuters.

Sec. 301. Qualified energy conservation bonds.
Sec. 302. Credit for nonbusiness energy property.
Sec. 303. Energy efficient commercial buildings deduction.
Sec. 304. New energy efficient home credit.
Sec. 305. Modifications of energy efficient appliance credit for appliances produced
after 2007.

Sec. 306. Accelerated recovery period for depreciation of smart meters and smart grid systems.
Sec. 307. Qualified green building and sustainable design projects.
Sec. 308. Special depreciation allowance for certain reuse and recycling property.

TITLE IV—REVENUE PROVISIONS
Sec. 401. Limitation of deduction for income attributable to domestic production
of oil, gas, or primary products thereof.
Sec. 402. Elimination of the different treatment of foreign oil and gas extraction
income and foreign oil related income for purposes of the foreign tax credit.
Sec. 403. Broker reporting of customer’s basis in securities transactions.
Sec. 404. 0.2 percent FUTA surtax.
Sec. 405. Increase and extension of Oil Spill Liability Trust Fund tax.

The inclusion of these credits is indeed pork, as they serve to benefit constituent groups back home and various groups within Congress that might otherwise reject the bailout bill. However, one must also keep in mind that the reason that these additional provisions were added to the bailout bill was because they weren't passed previously. Congress didn't think these bills important enough to pass up until now, and Congressional leaders decided to throw everything and the kitchen sink at this bailout bill to increase the likelihood of passage.

There is one other thing that I find bothersome about the doom and gloom naysayers regarding the bailout. Some were suggesting that we were only hours or days away from a total meltdown in the credit market. That was nearly two weeks ago. Somehow, the markets haven't shut down and credit continues to flow. Is the situation truly as bad as Treasury Secretary Paulson has claimed? One has to wonder given the resiliency seen in the market thus far; and Wall Street is anything but a disinterested party to all this since they'll benefit greatly from the risk of loss transferred from their balance sheet onto those of taxpayers.

UPDATE:
Clearly, I'm not alone in attacking the bailout bill and the dozens of unrelated pieces of legislation attached, including the tax extenders, sweeteners, and other assorted items of pork. MSNBC analyzes the situation and notes that specific items were designed to help persuade various members of Congress to support the bill.

It certainly isn't the kind of change that either McCain or Obama have been speaking of for months on end. Both want you to believe that they're going to change the way business is done in DC, and yet, both voted to approve the bloated bailout bill. On this particular issue, both sound exactly alike, even though McCain gets most of the grief since he's a GOPer and that he's taken a more active role in seeing a bailout happen.

Still, one has to wonder what exactly this bailout does to solve the underlying problem. You know, the part where the subprime loans get extended to people who are incapable of repaying the loans? That's not addressed here or anywhere else. Congress is too interested in having its cake and eating it to alter the lending rules to allow banks to reject individuals who have no credit, bad credit, or are high risk borrowers because organizations like ACORN would agitate that the decisions are based on race, and not a more rational reason like incapacity to repay.

Bad credit and no credit? No problem. That's the mantra of the ACORN types and affordable housing proponents in Congress including Rep. Frank and Sen. Dodd, and they ignored what would happen if things went sour.

They did. In a big way, but now Congress wants everyone to bail out the financials, all while still insisting that they keep the very rules that set up the mess in the first place.