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October 2, 2008
Transparency and the $700 Billion Bailout
When members of the U.S. Senate voted Wednesday evening to pass an emergency economic stabilization package authorizing the U.S. Treasury to borrow up to $700 billion to buy illiquid mortgages, securities and other assets that are said to be creating instability in the nation's financial anatomy, it simultaneously authorized unrelated expenditures that question the validity of the stabilization package itself.
Take a gander at the following list of unrelated budget provisions tacked onto the measure:
- Sec. 305. Extension of 15-year straight-line cost recovery for qualified leasehold improvements and qualified restaurant improvements; 15-year straight-line cost recovery for certain improvements to retail space.
- Sec. 306. Modification of tax treatment of certain payments to controlling exempt organizations.
- Sec. 307. Basis adjustment to stock of S corporations making charitable contributions of property.
- Sec. 308. Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands.
- Sec. 309. Extension of economic development credit for American Samoa.
- Sec. 310. Extension of mine rescue team training credit.
- Sec. 311. Extension of election to expense advanced mine safety equipment.
- Sec. 312. Deduction allowable with respect to income attributable to domestic production activities in Puerto Rico.
- Sec. 313. Qualified zone academy bonds.
- Sec. 314. Indian employment credit.
- Sec. 315. Accelerated depreciation for business property on Indian reservations.
- Sec. 316. Railroad track maintenance.
- Sec. 317. Seven-year cost recovery period for motorsports racing track facility. [From CNN: Creation of a seven-year cost recovery period for construction of a motorsports racetrack: Track owners currently follow a seven-year depreciation schedule and write each year's depreciation off their taxes. The IRS wanted to increase the depreciation timetable to 15 years, which would mean the track owner's depreciation would be cut in half. The measure in the keeps the seven-year depreciation schedule for two years and would cost taxpayers $100 million.]
- Sec. 318. Expensing of environmental remediation costs.
- Sec. 319. Extension of work opportunity tax credit for Hurricane Katrina employees.
- Sec. 320. Extension of increased rehabilitation credit for structures in the Gulf Opportunity Zone.
- Sec. 321. Enhanced deduction for qualified computer contributions.
- Sec. 322. Tax incentives for investment in the District of Columbia.
- Sec. 323. Enhanced charitable deductions for contributions of food inventory. [From Tax Payers For Common Sense: Extends by two years, until December 31, 2009, a provision allowing for deductions related to the charitable donation of "apparently wholesome food"--defined as food intended for human consumption that meets all quality and labeling standards imposed by law and regulations even though the food may not be readily marketable. This provision also changes the application of the law as it relates to donations by farmers and ranchers. The cost is $149 million, according to Joint Committee on Taxation.
- Sec. 324. Extension of enhanced charitable deduction for contributions of book inventory.
- Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds. [From CNN: Extension and modification of duty suspension on wool products, wool research fund and wool duty refunds: The measure helps U.S. worsted wool fabric makers and clothing manufacturers. The bill extends provisions through 2014 or 2015 that were originally sponsored by Reps. Louise Slaughter, D-New York, and Melissa Bean, D-Illinois, in 2007. The measure would cost taxpayers $148 million.]
- Sec. 502. Provisions related to film and television productions. [From CNN: Provisions related to film and television productions: In order to keep movie production in the U.S., production companies would be allowed to deduct the cost of producing the films from their taxes. Rep. Diane Watson, D-California, has been one of the program's biggest supporters. The measure would cost taxpayers $478 million over 10 years.]
- Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children. [From Taxpayers For Common Sense: Current law places an excise tax of 39 cents on the first sale by the manufacturer, producer, or importer of any shaft of a type used to produce certain types of arrows. This proposal would exempt from the excise tax any shaft consisting of all natural wood with no laminations or artificial means to enhance the spine of the shaft used in the manufacture of an arrow that measures 5/16 of an inch or less and is unsuited for use with a bow with a peak draw weight of 30 pounds or more. The proposal is effective for shafts first sold after the date of enactment. The estimated cost of the proposal is $2 million over ten years, according to the Joint Committee on Taxation. The Oregon senators were the initial sponsors of the provisions. According to Bloomberg News, the provision would be worth $200,000 to Rose City Archery in Myrtle Point, Oregon.]
- Sec. 504. Income averaging for amounts received in connection with the Exxon Valdez litigation. [From CNN: Income averaging for amounts received in connection with the Exxon Valdez litigation: The measure would allow the plaintiffs who won damages from Exxon Mobile for the oil spilled by the Exxon Valdez to average the award over three years rather than treating it as income in a single year. The measure was backed by Alaska Rep. Don Young and would cost taxpayers $49 million.]
- Sec. 505. Certain farming business machinery and equipment treated as 5-year property.
- Sec. 506. Modification of penalty on understatement of taxpayer's liability by tax return preparer.
- Sec. 601. Secure rural schools and community self-determination program.
- Sec. 602. Transfer to abandoned mine reclamation fund. [From Tax Payers For Common Sense: Transfers interest earned on money in the abandoned mine reclamation fund to the United Mine Workers of America Combined Benefit Fund, which helps pay health benefits for retired miners and their dependents who worked under collective bargaining agreements that promised lifetime health-care benefits. States with the most miners receiving benefits have historically been Pennsylvania, West Virginia, Kentucky, Virginia, and Ohio. This provision extends existing law to include a $9 million transfer for 2010.]
While many of the above measures may be worthwhile or beneficial programs and causes, in my opinion they have no place showing up in this economic stabilization package (or tacked onto any bill for that matter). That all three members of the Senate running for the two highest posts in the land (McCain, Obama, and Biden) voted in favor of this package with all of these entirely unrelated items attached to it, tells me that none of them are serious about changing business as usual in Washington, D.C.
The addition of unrelated "tax extender" legislation and earmarks to legislative measures is, in my opinion, wrong and needs to stop. Transparency isn't just a buzzword. Each and every measure listed above needs to be evaluated on its own merits and deserves its own discussion and deliberation. Yes, that's a timely proposition, but isn't that what our elected officials (supported by government staffers and an informed citizenry) were elected to do?
Posted by Mikal at October 2, 2008 11:32 PM
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Amazing! ...but maybe not. The American Government system is going from awful to down extreme down-and-out. What a shame. Wish I thought a write in vote for Ron Paul would make a difference. Thanks for posting this. Bravo.
Good point, Mikal. What kills me is that so many leading economists have spoken out against this bailout and very few in Congress have the sense to listen to them.
Hey Mike.
Thank you for posting these details - I pulled up the bill twice this week and tried to read it in detail. The first version was 100-200 pages in length and the second 400-500. I think I skimmed through 70 pages or so on the second version...
This bill is setting a very scary precedent. Speaking to your comment about LA, now California is demanding a bail-out from DC. Failing states and companies are getting in line.
Again, I get back to my observations on spending/financial health between the living generations here in the US. VERY FEW Depression era members would live beyond their means.
What we are feeling right now are the results of past legislation in Congress left to pass while many Americans continued to live beyond their means and Wall Street (temporarily) profit off of this cluster. We are ALL to blame.
Time to look at our own houses, first, before we start pointing fingers. This includes asking yourself these questions: do you spend more than you make, have you put your own family at financial risk due to risky business propositions AND have you taken the time to learn about and vote for each of your locally elected officials who represent you in Washington?
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