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Bailout or Rescue Plan? October 8, 2008

Posted by shwaldman in Politics, Society.
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The banks are going down, the stock market is crashing and Congress is caught off guard. Their attempts to bailout (not rescue) the banks is not helping ease the selling on all the world stock markets. So, now they are working on have all the world markets cut interest rates to help businesses (and individuals) get credit. Isn’t that what got us into this mess in the first place? I would like to see a list of the expertise of Congress – how many of them truly understand economics? They seem to be just throwing out ideas until they see the stock markets stabilize….”Let’s see if this works….”

Now, back to the BAILOUT plan. It is a bailout because the plan in intending to save the industry based on their excesses and lack of regulation, no one seems to be disputing that. This plan is bailing out companies and executives, not rescuing people from uncontrolled circumstances…. And it only got passed because of all the “sweetners.” I think most people who watched the congressional members reacting to the passing of this bill – negatively… Not to sound too cynical, but I am guessing because they didn’t feel good about the plan because they didn’t get sweetners that they can take back to their constituents that will help them get re-elected and knew it wasn’t truly resolving the bigger problem. Here are some examples totaling $23.5 Billion (apparently there is over $100 Billion in provisions like these) (taken from Taxpayers for Common Sense bailout summary) :

Not all the provisions are per se outrageous, but collectively are intended to help Congressional leadership get final passage of the 2008 Emergency Economic Stabilization Act and have nothing to do with rescuing the banks.

Here’s the list:

1. Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children. (Page 263) The estimated cost of the proposal is $2 million over ten years, according to the Joint Committee on Taxation.

2. Sec. 317. Seven-year cost recovery period for motorsports racing track facility. Page 262) The provision would be extend 2 years till the end of 2009 and would cost 100 million.

3. Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands. (Page 262) The most recent extension of the $13.50 rebate expired January 1, 2008. Cost is $192 million.

4. Sec. 301. Extension and modification of research credit.(Page 262) The two-year extension is estimate to cost $19 billion.

5. Sec. 504. Income averaging for amounts received in connection with the Exxon Valdez litigation.(Page 263) Cost is estimated at $49 million dollars.

6. Sec. 601. Secure rural schools and community self-determination program. … bringing the total cost to $3.3 billion.

7. Sec. 201. Deduction for state and local sales taxes (Page 261) The bailout bill extends this provision for 2 years at a cost of $3.3 billion.

8. Sec 502. Provisions related to film and television productions (Page 263) The cost is estimated at $478 million over 10 years.

9. Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds. The 2010 to 2015 cost is estimated to be $148 million.

10. Sec. 309. Extension of economic development credit for American Samoa. Page 262) The cost is $33 million, according to the Joint Committee on Taxation.

Sec. 201. Inclusion of cellulosic biofuel in bonus depreciation for biomass ethanol plant property.(Page 114) Current law allows taxpayers to write off 50% of the cost of any facility placed in service before January 1, 2013 that produces cellulosic ethanol.

Sec. 211. Transportation fringe benefit to bicycle commuters. (Page 114) This provision is estimated to cost $10 million.

Sec. 323. Enhanced charitable deductions for contributions of food inventory. Page 262) The cost is $149 million, according to Joint Committee on Taxation.

Sec. 324. Extension of enhanced charitable deduction for contributions of book inventory. (Page 262) The provision is worth $49 million.

Sec. 602. Transfer to abandoned mine reclamation fund. This provision extends existing law to include a $9 million transfer for 2010.

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