The voting on the Senate Version of the Bailout Bill has not started 08:56 PM (est) – but it is expected to be passed and sent to the House where an up or down vote will be required. The last word is that the House will not be given an opportunity to amend or change the bill.
After reviewing all 451 pages of the bill – I’m very surprised – minimal changes were made to the Bill that the House of Representatives defeated two days ago. Very minimal. The additional 331 pages concern completely unrelated items.
The Senate included these unrelated bills in this package to provide “cover” for those Congresspeople who intend to vote for the passage of the Bailout, but are looking for an excuse to justify their vote. You can expect to hear this spin tomorrow, “Oh I didn’t really support the Bailout, I was voting for – fill in the blank - instead”.
The following items have been included for passage with the “Bailout Bill” when there was no impending emergency that required the items to be passed in the late evening of October 1st, 2008:
Pages 113 – 165 ENERGY SECTION: Energy Tax Credits, Steel Industry Fuel Credits, Carbon Mitigation Credits, Coal Gasification Credits, Black Lung Funding.
Why are these items attached to the “Bailout”, so a Congressperson can tell their irate Constituent, I didn’t really vote for the “Bailout”, I voted for Energy Tax Credits or Black Lung Funding – Of course we know better.
Page 254 – Information Authorization for Covered Securities to Brokers – I’ll bet you had no idea that this was a topic that required immediate attention. I’ll bet that 80 of 100 Senators didn’t know this was an emergency either.
Pages 261 -266 Temporary Relief from the Alternative Minimum Tax. I’d like to see the Alternative Minimum Tax eliminated, however, this section should not be attached to this bill. I can hear the Congressperson now – I was really against the Bailout – but I was voting to end the Alternative Minimum Tax – for a time. If your Congressperson says this, ask them why they didn’t pass this legislation in September?
Page 279 – Rum Excise Tax Relief for Peurto Rico – Ok, truth be told, I’m all for tax relief on adult beverages – but did it really need to be attached to the “Bailout”.
Page 280 – Funding for Mine Rescue Training
Page 288 – Depreciation of Business Property on Indian Reservations (The actual Bill language – I thought our Native Americans were Native Americans and not Indians).
Page 289 – Railroad Track Maintenance
Page 290 – Cost Recovery for Motor Sport Racing Tracks
Page 295 – Duty Suspension on Wool Products
Page 297 – Child Tax Credit Extension – We all favor this – How many Congress people will hide behind this one. The question to ask is this – Couldn’t you vote this through on Thursday and not attach it to this stinker of a Bill. It will be represented and passed if the House Votes the Bailout Bill down again on Thursday Night.
PAGE 298 – Film and TV Production Tax Credits – Limits taxes to the first $15 Million of production costs. (On a $100 Million Dollar Movie – The last $85 Million are tax free. No wonder Hollywood is far left – it pays for them to be there).
Page 300 – Excise Tax Break for Wooden Arrows used by Children.
Page 301 – Exxon Valdez Llitigation Income Averaging.
Page 310 – 334 Domenici Mental Health Bill – This bill has been debated for 10 years. I will not discuss the merits of the proposal, however, the cost to the American Public might exceed a trillion dollars. After 10 years of debate this bill should have been brought up independent of any other bill. Senator Domenici, the sponsor, is retiring at the end of this term.
Page 334 – Secure Rural Schools
Page 364 – Special Projects Federal Land
Page 394 – Hurricane Ike Relief
Page 442 – Spending Reductions and Revenue Raisers to Support Tax Relief – I love this Sections name. It reminds me of an earlier life. We called them K-Rats, I believe they are called Meals Ready To Eat now. Now you get three lies, for the price of one. (Actually, MRE’s are much better than Krats ever were).
Now as to the “improvements to the Bailout Bill” that the House defeated. The changes are nothing more than window dressing.
1). Mark to Market – whether you like it or don’t like it – there is no mandated change. There is no specific rule change in this law. The language is identical to the defeated House BIll.
2). FDIC Increase in insured deposit limit from $100,000 to $250,000 – A purely cosmetic change. The “Bailout Supporters” claim it calms the markets. It may calm someone who doesn’t understand that individuals have either placed their money in separate accounts or used one of the “services” that have been available for 3 or 4 years to distribute funds between different banks so that all of a depositors money has always been insured. As far as helping liquidity – the change is irrelevant.
This provision may actually be a tax increase in disguise: Read the Myth of the FDIC Fund, By Bill Isaac, Former FDIC Chairman Here: http://mcauleysworld.wordpress.com/2008/10/02/fdic-insurance-an-accounting-myth-not-a-fund-bill-isaac-former-fdic-ch/
3). Additional oversight – minimal changes.
4). Executive Compensation (pg 30) is essentially unchanged – covers current but not past CEO’s and Executives. Only covers Executives from Companies who participate in the asset sale to the Government. Political claims that this provision covers all Wall Street Executives is false. Most Wall Street Executives won’t be involved in the Program.
Golder Parachutes are eliminated – in participating Companies – for 2 years (that 2 year limitation is found on page 112, 82 pages away from the main section on Executive Compensation). Gee, my bet is that no one is going to qualify for a Golden Parachute in the next two years – but I wouldn’t be surprised if someone’s Parachute opened in two years and one day.
5) Mortgage Relief – Assistance – Modification: No Change here. The language is unchanged. The Government picks the winners and losers. While not completely defined – the Bailout only provides help to those homeowners who have a mortgage with a failed bank or lending institution. If the bank that holds your mortgage is not participating in the bailout – this plan provides no help.
6). Fixing what got us here. Suspending the operations of the Communirty Reinvestmant Authority (The CRA is the agency that fostered the development of NINJA & LIAR Loans) removing the Boston Federal Reserve Manual on Mortgage Underwritng Reform from use (The Manual that set the standards for the worst of the sub-prime loans – the Manual that was used to coerce Banks into making these loans) or implementing the 2003-2004 suggested Accounting and Oversight Reforms for Fannie and Freddie are not even discussed in the Senate Bill.
The Bailout Supporters claim the “Bailout” will create easier credit (easy money) and improve the economy. They also claim that the “Bailout” will help liquidity. I wonder where that liquidity or money will flow to – the same scams that caused this problem in the first place?
The Senate Bill fails to reduce the burden on Taxpayors – there is no increased use of Insurance or Loan Programs.
For those of you who are familiar with Dave Ramsey’s Suggested “Fix” – they have failed to adopt any of his suggestions.
My estimate is that the current “Bailout Program” has an initial “buy-in” cost of $850 Billion Dollars – just for the “Bailout” (Not including Mental Health – etc). Not all of this tax payor cash is to be paid out up front. Of course there is no guarantee that the Government won’t be back for more once we start down this road.
CONTACT YOUR REPRESENTATIVE AND LET HIM KNOW HOW YOU FEEL – TELL THEM TO VOTE NO ON THE BAILOUT -
Contact Your Senators Here: http://www.emailyoursenator.com/senators.html Click on your Senators, Select the Contact Folder and then click on the email address.
Contact Congresspeople: http://www.house.gov/zip/ZIP2Rep.html You’ll need your zip code
I reviewed a copy of the Senate Bailout Bill through the FOX Business Channel Web Site: http://www.foxbusiness.com/story/markets/economy/senate-version-economic-rescue-package/
Tommorows Post: What is wrong with tighter Credit? – Credit Availablity In America Today.