Why is it that Congress can’t pass a bill without a bunch of add-ons? As it turns out, the bailout of the economy will be no different.
This evening, the Senate passed a version of the bailout bill by a vote of 74 to 25 (in case you’re wondering, both McCain and Obama voted yes).
The centerpiece of the bill remains an asset purchase of nearly $700 billion of
worthless at risk assets from failing troubled banks. The idea is that relieving the banks of these credit burdens will allow lenders to begin making loans again.
That, on its own, is not going to be enough to woo more votes in the House, especially among the GOP; nearly 2/3 of the House GOP voted against the plan two days ago. So, the Senate packed on more stuff. And yes, that means that the bill will end up costing more than $700 billion – perhaps as much as $810 billion (since apparently we can just print more money).
As expected, the bill increases the FDIC insurance cap to $250,000 from $100,000, but only temporarily. Both McCain and Obama went on record in support of the higher cap. The bill also allows the FDIC to borrow from the Treasury to cover any losses from the increase.
Those energy credits that weren’t going to be discussed before the elections? They’re included.
Research and development credit for businesses? Included.
A credit that allows taxpayers to deduct state and local sales taxes on their federal returns? Also included.
Heck, the Senate even added another patch to the AMT – this time in October (can’t you feel the excitement?).
Now, I’m not saying that any of these provisions aren’t worthwhile or important – that’s another post for another day. I just can’t understand how such a controversial bill to begin with – the largest bailout in American history – became a magnet for all kinds of legislation. And we haven’t even seen what the House might tack on…
Sen. Richard Shelby (Rep – AL) may agree. He felt that the Senate rushed into this latest version of the bill. He said:
I agree we need to do something. … [But] we haven’t spent any time figuring out whether we’ve picked the best choice.
Will it pass? I’m not sure. In between the partisan bickering, the worries about a disgruntled public (the site at www.house.gov crashed earlier in the week because of all of the traffic) and the calls from conservative leaders to let the free market play out, it will not be an easy vote. And the added tax cuts may sway some Democrats who initially voted “yes” since there is no offsetting revenue for the cuts.
The bottom line? Don’t expect an easy debate in the House.