So the Senate, which is more resistant to popular opinion by virtue of its longer terms of office and rotating elections,
will vote on the bailout tomorrow. And they'll probably pass it.
Majority Leader Harry Reid, D-Nev., and GOP Leader Mitch McConnell of Kentucky unveiled the plan Tuesday. The Senate plan would also raise federal deposit insurance limits to $250,000 from $100,000, as called for by the two presidential nominees only hours earlier.
The move to add a tax legislation — including a set of popular business tax breaks — risked a backlash from House Democrats insisting they be paid for with tax increases elsewhere.
But by also adding legislation to prevent more than 20 million middle-class taxpayers from feeling the bite of the alternative minimum tax, the step could build momentum for the Wall Street bailout from House Republicans. The presidential candidates Sens. John McCain, R-Ariz., and Barack Obama, D-Ill., intend to fly to Washington for the votes, as does Sen. Joe Biden of Delaware, the Democratic vice presidential candidate.
The tax plan was stalled out in the House last week. Helping relieve the middle class from getting hit with the AMT is fine, and would include the renewable energy tax credits:
The tax plan passed the Senate last week, on a 93-2 vote. It included AMT relief, $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.
This has now become a ridiculous inter-chamber slap fight. And really, where else could this have gone? They're larding on bills that may be popular to get people to relent and pass this pig. If they concurrently shrunk the plan to only get us through January, that would be one thing. But that's not happening.
As for the "progressive alternative," it doesn't read to me as
much of an alternative at all. The good part of it, raising the FDIC insurance limit, is in the Paulson plan now, and the rest of it seems to just be a new way to give away lots of money. The change away from mark to market accounting is
a fait accompli thanks to the SEC.
David Sirota seems to like it, but I fail to see how it would do anything to stop foreclosures or alleviate the housing crisis. It may, I repeat
may, save money on the initial layout. Maybe.
It's clear to me why the Senate is doing this. On the Democratic side, Obama comes off looking like someone who made this happen once he engaged. What's more, this crisis is playing well for them politically, not just for Obama but throughout US Senate races, and forcing
Saxby Chambliss or
Mitch McConnell, who are suddenly in close re-election races, into tough votes is advisable. For the Republicans, they are
really in a spot, having to run against Bush but also being held responsible for the Wall Street meltdown, so they want to show leadership or something. But ultimately, this is about the Senate sticking it to the House and getting out of town. That's what they
really want to do.
I'm not knee-jerk opposed to a bill if it only gets us through to January, but a big, bloated bailout doesn't make sense to me. There are smarter ways to intervene, but it doesn't seem like Democrats or even the Progressive Caucus is interested in it.
This is going to be a real tough vote for Bush Dogs. Bail out their Wall Street friends, but allow tax cuts without offsets?
Labels: bailouts, Democrats, FDIC, financial industry, GA-Sen, KY-SEN, Mitch McConnell, Saxby Chambliss, Senate