The Incredible Growing Bailout Bill

This is the problem with going to congress on something like this. They either jump on the opportunity to cram it full of expensive stuff that wouldn't pass on its own, or they are forced to add provisions to buy off wavering votes. Either way, it adds up to a bad bill, a terrible precedent and an insult to voters. Not that congress gives a crap.

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Senate bailout bill keeps growing
By DAVID ROGERS | 10/1/08 2:08 PM EDT Updated: 10/1/08 2:08 PM EDT Text Size:



The Senate hopes to revive the rescue plan by packaging it with popular tax breaks and aid to rural schools.

The Senate hopes to revive Treasury’s $700 billion financial rescue plan Wednesday night by packaging it together with more than $100 billion in popular tax breaks as well as aid to rural schools important to House Republicans.

To calm voters fearful of bank failures, the $100,000 cap on federal insurance for deposits would also be raised to $250,000—a concession backed by both parties but also aimed at community banks who can be helpful in building small town support for the larger bill.

With each permutation, the bill has steadily grown in size. Treasury’s initial plan was about three pages long. The House version, which failed, stretched to 110. The Senate substitute now runs over 450 pages. And tucked away in the tax provisions is a landmark health care provision demanding that insurance companies provide coverage for mental health treatment—such as hospitalization—on parity with physical illnesses.

Really a bill onto itself, the mental health parity measure has been a bipartisan priority for top lawmakers in both chambers but has stalled because of disagreements again over how to pay for its estimated $3.8 billion five-year cost. In the current climate, that seems to be no longer a stumbling block, and if the Treasury plan becomes law, it will also.

Both presidential candidates, Sens. John McCain and Barack Obama, are slated to return for two important roll calls Wednesday evening, and Obama appears to be playing an increased role in shoring up support among House Democrats after the bill failed Monday.

Proponents hope a strong Senate vote—with support from both candidates—will marginalize the opponents in the House, which could vote Friday on the revised package. In early trading Wednesday, the Dow was holding steady. More important perhaps in the credit markets, the London inter-bank offer rate or Libor, which influences what charge in borrowing from one another, had dropped by 3 points—after spiking Monday night in the wake of the House defeat.

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When the Treasury plan went down in the House, it was clearly hurt by the public perception that it was nothing more than a costly bailout for Wall Street. And since then there has been a more concerted effort by proponents to broaden grassroots support around the nation.

The U.S. Chamber of Commerce has begun radio ads targeted at lawmakers. The Republican and Democratic chairmen of national governors associations for the two parties released a joint letter Wednesday urging Congress to act. And the courtship of community banks— by raising the insurance level for deposits –builds on a decision over the weekend to also include tax breaks for local banks which were hurt by the government takeover of the two mortgage finance giants Fannie Mae and Freddie Mac.

Senate leaders are confident that they can prevail, but the strategy is not without risks in the House given the added costs of the tax package. Congressional Budget Office estimates indicate that the net impact will be to add almost $105 billion to an already large deficit next year, and fiscal conservatives will feel they are being straight-armed by the Senate which has refused to do more to offset the costs.


http://www.politico.com/news/stories/1008/14161.html

 

BUt is the alternative any better?