Can you say pork? I knew you could.
This bill is even worse than the one rejected by the House in a bipartisan fashion. I have no reason to believe that this version will solve the problems in the financial markets any better than the last version, but it is more likely to pass Congress precisely because of all the pork included.
Instead offering up a plan that deals with the crisis in a well reasoned and clear manner, Congress instead uses the situation to lard up and bring home more bacon for their constituents.
For example, you've got the following from Rich Lowry on specific items included:
New Tax earmarks in Bailout billHow exactly does any of that have to do with solving the financial crisis? It doesn't. It's members of Congress doing what they always do - look out for themselves first and foremost.
- Film and Television Productions (Sec. 502)
- Wooden Arrows designed for use by children (Sec. 503)
- 6 page package of earmarks for litigants in the 1989 Exxon Valdez incident, Alaska (Sec. 504)
Tax earmark “extenders” in the bailout bill.
- Virgin Island and Puerto Rican Rum (Section 308)
- American Samoa (Sec. 309)
- Mine Rescue Teams (Sec. 310)
- Mine Safety Equipment (Sec. 311)
- Domestic Production Activities in Puerto Rico (Sec. 312)
- Indian Tribes (Sec. 314, 315)
- Railroads (Sec. 316)
- Auto Racing Tracks (317)
- District of Columbia (Sec. 322)
- Wool Research (Sec. 325)
Ed at Hot Air also weighs in on the larding up of this "rescue bill." Disgraceful doesn't even begin to cover it.
The financial crisis didn't happen because of a lack of oversight; it began because of government distortion of the marketplace and the extension of loans to those who were incapable of repaying. That simple fact underlies the entire failure of the credit markets because the bad loans were repackaged time and time again, hiding the fact that their value was unknown and the credit ratings didn't reflect the true risk of the products. When values increased, everyone made money, but when real estate began the inevitable pricing correction, the subprimes got hit hardest and began a domino effect throughout the credit markets.
Now, we're left with various plans that claim to solve the situation by throwing more money at the institutions that had the greatest exposure to the toxic paper, but as if that wasn't enough, Congress is larding up the bill to try and get it passed.
Wizbang makes some good points. Top among them is the concern that was previously expressed by Mark Levin, which is namely whether any of what Congress and the Administration actually constitutional? The Constitution sets limits as to what Congress can do via the enumerated powers. I think the appropriate response to that would be Art. 1, Sec. 8, Cl. 18.
Still, more germane to the discussion is whether the bailout actually fixes the underlying problem? The answer to that is clearly no. It is a band aid that throws more money into the system to improve liquidity int he marketplace, but it doesn't address the fact that the federal government continues to push for more subprime lending, despite the toxic effects it has on the market. The bailout packages that Democrats keep agitating for would add funding to the very entities that push for still more subprime lending, despite their role in the crisis.
It's instructive to see how a 3-page Treasury version of the bailout bill morphed into a 110 page version that was killed by the House. We're now up to 450 pages in the Senate substitute, and it's larded up with pet projects and completely unrelated packages, including a mental health reform package that runs $3.8 billion. They're attaching that to the bailout since they figured they couldn't pass the bill on its own since its supporters couldn't figure out how to actually pay for it, so they figure that by appending it to a bill that by most accounts is badly needed to save the economy, it will pass no questions asked.
Well, guess what. We're asking questions as to why all these unrelated items are getting attached to a bill of this import and whether any of the members are actually reading this stuff.
The Senate voted on the bailout package this evening, and they approved the measure. CSPAN reports that the bill passed 74-25, with McCain, Obama and Biden all voting to approve the bill. It will again go to the House, where the outcome remains far from certain as Speaker Pelosi is hoping to convince her own caucus to vote for it. Of course, it's larded up with pork and pet projects to entice people to vote for the bill, but that may turn off still more fiscal conservatives who see this bill as a mess even without the pork.
The text as passed is here. The bill is HR 1424.
Section 115 (page 40) sets forth the actual bailout - the $250 billion initial amount, an increase to $350 billion, plus the additional $350 billion if conditions warrant.
The Comptroller General will have an oversight power over the troubled assets relief program (TARP) (page 49). A special inspector general will also have oversight.
The debt limit is increased to $11.315 trillion dollars (Section 122, page 68).
I'm still reviewing and will add interesting provisions as I get to them.
Section 132 authorizes the possible suspension of the mark to market rule. (page 88) The issue of mark to market will be further studied.
Section 136 (page 91) provides a temporary increase in the FDIC insurance limit from $100,000 to $250,000, effective until December 31, 2009. However, the temporary increase will not be used when setting assessments.
There are several tax provisions amended dealing with gain or loss from Fannie Mae and Freddie Mac and preferred shares, along with treatment of executive compensation.
Beginning with page 113, the bill includes the Energy Improvement and Extension Act of 2008, including the following:
Sec. 101. Renewable energy credit.Beginning on page 261, there are provisions relating to tax extenders and the AMT relief. There's also the Subtitle B—Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008. Disaster relief from Hurricane Ike and related flooding in the Midwest is provided.
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
Sec. 114. Special rules for refund of the coal excise tax to certain coal producers
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
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
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
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.
Of this bloated bill, only the first 110 pages or so actually relates to the financial crisis. The rest is business that Congress failed to enact previously for one reason or another. They figure that if they throw enough stuff into the bill, members will be unable to object.
Labels: 2008 toxic paper crisis, Congress, Porkbusters