The Senate has tweaked the bailout bill, and is likely to pass it tomorrow. The tweaks include point #5 of the "No Bailout Act," plus a range of not very offensive tax cuts. It still contains the original flaw of the plan--its enormous size that hands over a large portion of the Obama presidency to Henry Paulson and, through him, Wall Street (even though Obama himself doesn't seem to care). Here are the tweaks:
The Senate agreed to vote on the legislation along with the measure temporarily raising the limit on federal deposit insurance to $250,000 from $100,000. That increase was proposed by Republicans critical of the plan authorizing Treasury Secretary Henry Paulson to buy troubled debt from lenders, which was rejected by the House on Monday.
Fiscally conservative House Democrats known as Blue Dogs opposed the Senate bill because it wasn't fully offset by new tax revenue. The House version of tax breaks was paid for. Senate leaders refused to consider the House bill, saying it would never pass in that chamber. The financial rescue measure won support from 24 of the Blue Dogs on Monday.
Yes, the Blue Dogs were truly the cornerstone of opposition to the original bailout due to their fiscal conservatism. I mean, only 60% of all Blue Dogs voted for the bill, meaning that 40% opposed it. Surely, they were the key! These dudes are really good at getting press for anything they do, even when they don't do it.
The Senate measure will graft the bailout language to a tax bill it approved last week, on a 93-2 vote. It includes: a provision to prevent more than 20 million middle-class taxpayers from feeling the bite of the alternative minimum tax, $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas and Louisiana and some $78 billion in renewable energy incentives and extensions of expiring tax breaks.
In a compromise worked out with Republicans, the bill does not pay for the AMT and disaster provisions but does have revenue offsets for part of the energy and extension measures.
That doesn't strike me as offensive, except in that it will probably allow the bill to pass both chambers and become law.
I wish there was some way to cut down the size of this bill, such as removing the $100 billion that Paulson can grab for after he receives the $250 billion. At this point, it seems like the bill is going to pass, and so the goal should be to limit the damage it causes. The heart of its damage is its excessive size, and so removing that $100 billion might be the best way to go.
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