The US House of Representatives passed the now-infamous $700 billion Bailout Bill 263 to 171 today. Here’s a summary of some details:
Political Points:
-Democrats mostly voted for it; most Republicans voted against it.
-Hank Paulson says that he’s working on hammering out details at this very moment so that the plan can be implemented ASAP.
-The New York Times reports that many lawmakers signed it because they were afraid of the economic “calamity” that would occur if they didn’t.
The Cost:
-The Senate, when it passed the plan on Wednesday, added renewable energy tax breaks and a new alternative minimum tax exemption of $46,200 for individuals and $69,950 for married couples in 2008. This package costs an additional $150.5 billion.
-The bailout plan starts with a disbursement of $250 billion to buy up banks’ bad assets. President Bush will have authority to sign over the next $100 billion. The final $350 billion will be released after the Treasury requests it. Congress has authority to block this final payment within 15 days.
-If the rescue plan loses money after a 5-year period, the next president has to come up with a way to get back those losses from the financial industry, via taxes, penalties, fees, etc.
Who Wins:
-Banks, who get their balance sheets wiped clean.
-Many old guard Wall Street executives, who remain exempt from government scrutiny.
-700 counties in 39 states who used to depend on federal timber sales to pay for rural services, such as schools (from the AP).
-Mental health patients, who now get health insurance benefits equal to those granted for other medical treatments.
-Disaster-stricken states, who get tax relief.
-Chevy fans, who get a $7,500 tax break for buying the Volt.
-Renewable energy companies, who benefit from tax incentives.
-Certain people with foreclosed homes, who will temporarily be exempt from federal income tax.
-Henry Paulson, Jr., assuming he’s really into power.
Who Loses:
-Whoever has to finance this monster. Taxpayers, barring the plan’s whopping success.
-The oil and gas industry, whose tax breaks are now more limited.
-New school Wall Street executives, who aren’t allowed to be paid nearly as much as their predecessors.
-Fans of the free market, who will find that the real estate and banking markets are now under constant watch.
Conclusion:
It’s a pork-lined executive power ticket for the people who manage federal money. Let’s hope it works.
