The “bailout for our country” is not what it seems

"Inaction is not an option," Senate Majority Leader Harry Reid of Nevada said a few hours before the Senate was to vote. "This is not a bailout for Wall Street. It's a bailout for our country."

When someone is unsure about which side to be on concerning controversial issues, it is usually important to see who are the supporters and opponents. This is especially valid when you find those with whom you most always disagree are trying to convince you their side is the right one.

Perhaps among elected politicians the one who represents the worst of public interest is Senator Harry Reid. This Senate Majority Leader constantly represents the most leftist expression of politics; if Reid is for or against something you can bet the better position for the country is the opposite. Reid is for immediate passage of the so-called “bailout for our country” legislation along with corrupt senators like Banking Committee Chairman Chris Dodd and the Goldman Sachs representative in government, Democrat Treasury Secretary Henry Paulson. They essentially say the financial sky will fall if congress does not act without haste. As is usually the case in such matters, the usual and some unusual suspects on the other side of the isle also agree with socialist Democrats and will vote for passage of socialist legislation without any serious review of the law they will impose on the people they are supposed to represent but who disagree with what they support by huge margins.

You may be unaware that the law they seek to enact is actually an amendment to Section 712 of the Employee Retirement Income Security Act of 1974, Section 2705 of the Public Health Service Act and Section 9812 of the Internal Revenue Code of 1986 ostensibly “to require equity in the provision of mental health and substance-related disorder benefits under group health plans, to prohibit discrimination on the basis of genetic information with respect to health insurance and employment, and for other purposes.” Imagine - the most extreme government take over of our economy in our history poses as an amendment to an employee retirement security law! However, to make it seem that law makers know what they’re doing, they label the monstrosity the “Emergency Economic Stabilization Act of 2008.”

The law these alarmists want to pass because “inaction is not an option” is 451 pages long. What are the chances each senator and each representative has read the proposed law? Can you picture the barely literate Reid or the unlikely Speaker Nancy Pelosi reading 451 pages of anything? Sad as it is for me to say, I can’t even imagine President Bush, an avid advocate for “doing something”, reading or even being fully aware of everything the bill contains.

The first thing everyone should know is that the bill establishes another bureaucracy, the "Office of Financial Stability" under the Treasury Department. Then consider some of the things in this “rush-to-judgment” bill now passed by the senate.

A boost in the FDIC deposit insurance cap to $250,000 from $100,000
A one-year "patch" to the alternative minimum tax
Optional insurance for mortgage-backed securities, with financial institutions paying premiums
Tax breaks for those impacted by natural disasters
A mental health parity provision providing insurance for mental illness
A Two-year extension of the research-and-development tax credit Although the energy portion of the Senate package was funded through limiting tax breaks to energy companies, other portions of the bill were not funded.

More specifically, some of the "earmarks" added -

TITLE V—ADDITIONAL TAX RELIEF AND OTHER TAX PROVISIONS
Sec. 502. Provisions related to film and television productions.
Sec. 503. Exemption from excise tax for certain wooden arrows designed for use by children.
Sec. 504. Income averaging for amounts received in connection with the Exxon Valdez litigation.

TITLE III—EXTENSION OF BUSINESS TAX PROVISIONS
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. 314. Indian employment credit.
Sec. 315. Accelerated depreciation for business property on Indian reservations. (Casinos)
Sec. 316. Railroad track maintenance.
Sec. 317. Seven-year cost recovery period for motor sports racing track facility
Sec. 318. Expensing of environmental remediation costs.
Sec. 321. Enhanced deduction for qualified computer contributions.
Sec. 322. Tax incentives for investment in the District of Columbia.
Sec. 325. Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds.

Should anyone really familiar with this bill and everything that will become law upon passage vote for this bill? Are such things as the following essential to avoid a financial calamity?

A mental health parity provision providing insurance for mental illness
Provisions related to film and television productions.
Exemption from excise tax for certain wooden arrows designed for use by children.
Income averaging for amounts received in connection with the Exxon Valdez litigation.
Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands.
Extension of economic development credit for American Samoa.
Extension of election to expense advanced mine safety equipment.
Extension of election to expense advanced mine safety equipment.
eduction allowable with respect to income attributable to domestic production activities in Puerto Rico.
Indian employment credit.
Accelerated depreciation for business property on Indian reservations. (Casinos).
Railroad track maintenance.
Seven-year cost recovery period for motor sports racing track facility.
Expensing of environmental remediation costs.
Enhanced deduction for qualified computer contributions.
Tax incentives for investment in the District of Columbia.
Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds.

Not only does the bill contain such anomalous provisions as these, but the core of the bill, and the principal opposition to it, remain the same. This “bailout” would require the government to spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions at higher than market prices. The bill does not contain offsetting spending cuts to pay for the increased spending in the bill (now estimated to be over $850 billion).

There are all sorts of “sweeteners” in the bill including plenty of obscure tax breaks to make the bill more palatable and gather support; but are they worthwhile? For example, can anyone explain how provisions added by the Senate to require large companies' health plans to give equal treatment to mental health or addiction if they cover such illnesses will help our credit crunch?

Law makers are duty-bound to know what they are voting on; that’s the least they owe those they represent. Congress should thoroughly explore alternatives to a government take-over of any part of the free market and certainly such a large segment as our financial system. The country will not collapse as advocates claim if law makers take more time to understand what they are doing and develop a law specific to correcting any deficiencies in our financial system without nonsensical provisions that have nothing to do with the matter at hand, add to our bureaucracy and increase government spending.

Vincent Gioia is a retired patent attorney living in Palm Desert, California. His articles may be read at http://www.vincentgioia.com/ and he may be contacted at gioia@gte.net.

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