If you are like me, you occasionally wonder what our Congress is spending our tax dollars on. I’ve been searching for an official copy of the bill and the usual summary that accompanies these things – and have not found it. So in the interest folks knowing what is going on, I thought I’d offer up a two cent summary of the $800 Billion bill that will be voted on tomorrow.
The bill is a combination of the 110 page House bailout bill with a FDIC temporary increase in the account size that can be insured limit (which is not published – only Sunday’s 103 page House bill draft is available) plus various add-ons that are mainly tax bills already “approved” by both House and Senate but stuck and not passed because of various reasons (“tax cut not offset with expense cut” Blue Dog plus GOP opposition in House, “political timing must be post-election” in the Senate). But there are a few additional items that I am told that are also already “approved” by both House and Senate, such as:
And there are two National Security provisions that read like they are CYA for Bush Administration crimes and may well appeal to the House GOP:
* Extend tax credits for marine and hydrokinetic research, which involves energy created from waves and tides, as well as solar and fuel-cell research.
* Allow energy credits to be counted against the alternative minimum tax.
* Give steelmakers tax credits for purchase of renewable fuels.
* Let utilities issue tax-free bonds to promote use of clear, renewable fuels.
* Expand tax credits for investment in coal gasification programs.
* Extend by four years a temporary increase in the coal excise tax to fund black-lung disability programs for miners.
* Provide tax credits for carbon sequestration efforts.
* Allow producers of cellulosic bio-fuels to seek accelerated tax depreciation.
* Double the tax credit for production of bio-diesel and renewable diesel fuels.
* Extend a tax credit of $2,500 to plug-in electric hybrid vehicles. (should be larger IMHO!).
* Allow fringe benefit reimbursement for qualified bicycle commuters.
* Broaden the scope for issuance of conservation bonds.
* Extend current deductions for energy efficient commercial buildings and homes.
* Provide small tax credits for purchase of energy efficient dishwashers, washing machines and refrigerators.
* Accelerate tax deductions for use of smart meters that help a consumer regulate energy use to reduce peak-hour consumption.
* Reduce by 3 percent the tax deductions on income enjoyed by producers, refiners, transporters and distributors of oil and natural gas.
* Eliminate the difference in tax treatment of foreign oil and natural gas production and foreign oil-related income.
* Extend and increase by 3 cents a barrel the oil spill liability tax.
* Extend tuition deductions.
* Extend certain deductions for elementary and secondary school teachers.
* Extend an additional standard deduction on real property taxes for non-itemizers.
* Continue tax-free distribution from retirement plans to charities.
* Extend and modify the research tax credit.
* Extend restaurant improvement credits.
* Extend the tax credit for mine-rescue team training.
* Extend the tax credit for advanced mine safety equipment.
* Accelerate depreciation of business property on Indian reservations.
* Extend cost recovery period for motor racing tracks.
* Extend work opportunity tax credit for Hurricane Katrina employees.
* Extend increased rehabilitation credit for structures in Gulf of Mexico opportunity zone.
* Extend tax credit for investment in the District of Colombia.
* Increase tax deduction for charitable contributions to food inventory.
* Increase tax deduction for charitable book giving.
* Raise to $8,500 the income threshold for calculating the refundable portion of a child tax credit.
* Exempt from excise tax certain wooden arrow shafts for use by children. (prior tax on hunting arrows accidentally hit kid arrows killing industry in Oregon).
* Clarify income averaging for settlement amounts received in connection with Exxon Valdez litigation.
* Provide temporary tax relief for areas damaged by Midwestern storms, tornadoes and flooding and by Hurricane Ike.
And finally we have the House Bailout Bill as adjust for yjat FDIC insurance change that would:
* Provide $250 billion immediately to purchase mortgage-backed securities and other troubled assets, another $100 billion with the president’s authorization and the remaining $350 billion would be subject to separate congressional approval.
* Give the Federal Deposit Insurance Corp. the ability to borrow without limit from the Treasury to help stabilize banks it regulates, both large and small. This isn’t in the House legislation.
* Allow the FDIC to raise deposit insurance to $250,000 from the current $100,000. Affects the sum of deposits, not each account, in a depositor’s name at any given bank. This too isn’t in the House legislation.
* Require the comptroller general to monitor and evaluate TARP’s performance, especially whether it is helping to prevent foreclosures, providing stability in financial markets and protecting taxpayers. The Government Accountability Office will have authority to order corrections in the TARP effort.
* Order the comptroller general, the nation’s chief auditor, to report back to Congress by June 2009 on whether the government should curtail the ability of banks and others invest with borrowed money. Investment banks borrowed $30 to $40 against every $1 of their own capital they invested, helping create today’s global financial crisis.
* Limit courts from issuing restraining orders or injunctions against the Treasury secretary unless alleging a constitutional violation. In those cases, injunctions would have to be handled on an expedited basis by federal courts. Significantly, there is no limited liability expressed that would necessarily protect the federal government from lawsuits by investors when the government purchases distressed assets.
* Create a special inspector general for the TARP program, to supervise and audit the purchase of distressed mortgages and other bad assets.
* Raise the nation’s debt ceiling to $11.3 trillion.
* Hold hearings on the effectiveness of the program and issue a special report on proposed regulatory reform.
* Reaffirm that the Securities and Exchange Commission has the authority to suspend an accounting rule that some critics think has exaggerated the deflated prices of the toxic mortgage bonds at the heart of the financial crisis. The practice, called mark-to-market reporting, requires banks and other financial firms to report the present-day value of distressed assets that have a hold-to-maturity value. This also is called fair-value reporting, and it was implemented after the Enron scandal to discourage reporting of inflated prices.
* Limit the tax write-offs for executive compensation above $500,000 for companies that sell distressed assets to the government.
* Prohibit “golden parachutes” for executives of firms that are selling assets directly to the government. If the government purchases from a firm, via auction, $300 million or more in troubled assets, similar limits on bonuses and other executive compensation would apply.