Thursday, October 2, 2008

Sweetening the Bailout

Here's how the Senate is planning to broaden support for the bailout (from Slate):

In what USA Today describes as "a maneuver to reverse a stinging House rejection of the plan," the Senate added several popular measures to the original bill. How many? Well, just think of it this way: The rescue package began as a three-page proposal by the Treasury Department and now clocks in at 451 pages. These additions include an increase in bank insurance limits and a host of popular tax breaks for businesses and individuals that add up to $150 billion. Its passage in the House remains far from certain as fiscally conservative Democrats have long opposed extending the tax breaks unless they were offset by tax increases or spending cuts. Still, Republican leaders said they are optimistic that the sweeteners would be enough to convince some lawmakers to change their vote.

"Instead of siding with a $700 billion bailout, lawmakers could now say they voted for increased protection for deposits at the neighborhood bank, income tax relief for middle-class taxpayers and aid for schools in rural areas," notes the New York Times. Indeed, the Los Angeles Times points out that a few "of the changes appeared aimed at enticing specific lawmakers," including expanded coverage of mental illness and a tax break for bicycle commuters. The Wall Street Journal says that the bill now has "a number of tax breaks that have been attacked by fiscal conservatives, including an exemption from a 39-cent excise tax for children's wooden practice arrows."