This is a very in-depth post with a great deal of information to absorb. I suggest not attempting to read it unless you are prepared to spend an hour or so.
Here we are, in the midst of the biggest financial crisis since the Great Depression, and the members of the U.S. Senate are busy dispensing pork in a shameless fashion.
In their vote on the $700 billion Wall Street bailout Wednesday night, senators packed the bill with scores of lavish goodies to please favored groups and win support from opponents in today's House vote.
Take, for instance, Section 305 of the 450-page bill, "Modifications of Energy Efficient Appliance Credit."
It runs several pages long and contains separate sections for "dishwashers," "clothes washers" and "refrigerators."
The bill says manufacturers of energy-efficient appliances will qualify for up to $250 in federal tax credits for each machine they produce over the next three years. Total cost to taxpayers: $322 million over 10 years.
In case your refrigerator is on the blink, you should note the bill says nothing about passing any savings on to the consumer.
Among other goodies in the Senate version:
- Two separate tax breaks for film companies that produce movies in the U.S.: the cost, almost $500 million.
- An extension of tax rebates to Puerto Rico and the Virgin Islands on rum duties: Another $192 million over 10 years.
- Six pages of earmarks to benefit Alaskan fishermen who were victims of the 1989 Exxon Valdez disaster. That break, worth $239 million, is clearly aimed at winning the vote of U.S. Rep. Don Young (R-Alaska), who voted against the bailout package last week.
- A $10 million credit to help employers defray the costs of storing the bicycles of their employees who commute to work!
You can't make this stuff up.
To be fair, there are several provisions of the bill that will undoubtedly help millions of people.
Hurricane disaster relief breaks, for instance, and better deductions for costs of higher education. The most costly, at $62 billion, is a provision that will save some 24 million middle-income families from being hit this year by extra taxes under the IRS' dreaded Alternative Minimum Tax.
Still, why did Senate leaders clutter up a bailout bill that has infuriated millions of Americans with tax breaks that will produce a net cost of an extra $112 billion?
The answer is simple: Because they could.
Because they know America's corporate leaders are desperate to get the financial system off life support. This was the Senate's chance to win a longstanding battle with the House over tax legislation.
"There's been a battle for years with both houses having alternative tax bills," said Rep. Charles Rangel (D-Manhattan), head of the House Ways and Means Committee.
House Republicans and conservative Democrats long ago agreed on a pay-as-you-go rule. Under that rule, all tax breaks must be matched by cuts in spending or by new revenues.
In the Senate, they love to dispense bigger portions of pork, and they rarely worry about how to pay for it. Until this week, the Senate had failed to get the House to agree to its list of tax breaks.
By tacking these breaks onto the Wall Street bailout, Senate leaders expect to peel off enough Republican House members to pass the entire package.
Wall Street gets its bailout. The refrigerator makers get their tax credit. We pay for it all - and then eat leftovers.
Continued with Part 2Walter
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