Rescue, Take II: Tonight's Senate Vote
This evening at 7:30 p.m., the United States Senate is scheduled to vote on its own version of the economic rescue plan that the House voted down on Monday.
The new version comprises virtually all the provisions of the House plan, but with the following key add-ons:
• FDIC: an increase in the ceiling on bank deposits insured by the FDIC from $100,000 to $250,000
• The Extenders: an extension of tax breaks - known as the "extenders" - for renewable energy, research and development, the state sales and college tuition deductions, and numerous other provisions
• AMT Patch: an Alternative Minimum Tax "hold-harmless provision without which 20 million additional Americans would now have to pay the "income tax for the wealthy"
• and, possibly, a Homeowner Tax Credit: a $500 tax credit for individual homeowners that don't itemize their tax returns. Married couples would receive $1,000 under the plan
Official CBO and JCT cost estimates for the Senate version are not yet available, but it would be more expensive than the $700 billion House version, possibly by as much as $150 billion.
The prospects for passage of the bill in the Senate are strong, due to the changes outlined above and a shifting public perception. As Bill Novelli, CEO of AARP, now says, "in this case, Wall Street is us. These are our stocks, our retirement funds, our futures... It's OK to be angry, but what we need now is action."
The House is expected to take up the Senate version, if it passes, on Friday.
I think adding tweaks to the tax code just confuses the issue even more. And, being a bit cynical, I think that's the main reason for doing it.
They are grasping at straws to try to give House Republicans "cover" when they change their votes on this thing.
And that smells of desparation, and that makes me even more convinced that this thing should just die.
Start over with a new premise, please. There are good alternatives out there, being discussed.
-- ARG
October 1, 2008 3:24 PM | Reply | Permalink
I agree. More lipstick on an ugly pig.
(Is that sexist?)
October 1, 2008 3:26 PM | Reply | Permalink
And it is now impossible for them to compromise on anything because they made such a bid deal about voting based on their "principles" of no bail out.
October 1, 2008 3:32 PM | Reply | Permalink
Tax code tweaking is added to a bill for the purpose of threatening legislators with the prospect that if they fail to vote for the bill, their election opponents will sound-bite them with the charge they "Raised Taxes".
October 1, 2008 3:44 PM | Reply | Permalink
so the $700 billion price tag was to low and only by making it some $150 billion more costly can it make sense to Congress. These add on does not even seem to address the objections in the House. I don't think the House will go for this. They voted against it base on "principles" still not addressed.
October 1, 2008 3:28 PM | Reply | Permalink
It went up 150 billion, because it failed the first time.
keep delaying and it'll go up higher.
October 1, 2008 3:36 PM | Reply | Permalink
Democratic Senators need to consider very carefully what their constituents' needs are as they consider this bill, which still does not address the basic need to make a plan about the mortgage crisis.
October 1, 2008 3:37 PM | Reply | Permalink
. . . shifting public perception.
So, "they" say --
And only after an out-and-out media blitz against a credulous demos.
October 1, 2008 3:39 PM | Reply | Permalink
I know that republicans are devoid of any sense of irony but surely comparing hockey moms to pitbulls with lipstick is as sexist and as poor a characterization of a section of womanhood as it comes.
Anyway, the problem with the whole banking sector is capital ratios and the erosion of capital. Buying bad paper at market rates will force banks to realize their losses and destroy their capital overnight. Nor am I in favor of changing accounting standards so that assets are not marked to market. That's just hiding the problem, and marking to market was brought in to stop arbitrary and unrealistic valuations. Not something we want to return to.
Let the banks keep and manage their bad debt. They are in the best position to make decisions to extract themselves in the best possible way. If they need the government to reestablish their capital then Warren Buffet has shown the way.
If preferred shares with a 10% return plus options on an equal value of shares for 5 years was the going rate for the supposedly best run and least endangered investment bank then the same or higher return would be expected from more risky ventures. If losses wipe out the original capital the corporation would become 100% taxpayer owned or could be sold to an ongoing entity or allowed to go bust. It's not the government deciding who is a winner or loser; they are using their best judgement to decide which losers to keep alive to stabilize the economy. The share holdings can be returned to private ownership over time.
That would keep government intrusion to the level needed by any particular corporation, would keep them out of holding marginal paper it has no skill in dealing with. AMT needs to be properly fixed. Raising the FDIC guarantee is long overdue as an inflationary revaluation. Controlling loser board remuneration is window dressing but taxpayers deserve to take some revenge on greedy bastards who didn't protect their shareholders and put the whole economy in this position.
Simpler is better.
October 1, 2008 6:07 PM | Reply | Permalink
All excellent suggestions and observations.
How does it feel to be an adult citizen in a republic and realize your views are accorded no consideration, at all?
October 1, 2008 8:49 PM | Reply | Permalink
Ellen, if that was to me, not at all happy.
As to my views, I would be alright if I was the minority. I'm not sure most actually understand why they are right but I'm glad if you are on my side.
We are walking a path that does not keep the markets in the game as much as we could.
October 1, 2008 10:41 PM | Reply | Permalink