About That “Pork” In The Bailout Bill…

I’ve spoken with both U.S. Senate offices, and this is their explanation (or my understanding of their explanation) of the pork in the bailout bill:

With one exception, all of the sweeteners were tax extensions that were already passed by the house, and/or were set to expire at the end of the year.  The tax subsidy to racetracks, for instance, is recognition that when a facility such as Atlanta Motor Speedway repaves its track, it is allowed to depreciate the repaving over 7 years instead of 20.   7 years is not an exceptional amount of time, and is much closer to the useful life of the pavement than 20.

The new sweetener in the bill is a “fix” of the Alternative Minimum Tax calculation, that would otherwise have 20 Million middle-class Americans facing the Alternative Minimum Tax this year.  This is something Republicans have been advocating forever, but have been unable to get through Congress.

Conservatives on this blog and others have been completely apoplectic since the vote.  As I’ve said many times before, I think there were better ways to accomplish the objectives that this bill set out to solve.   But I also think the hyperbole to attack the “pork” in this bill has been over the top, without understanding that most of it was renewing tax credits and treatments, with the remaining being an improvement in the AMT calculations.

26 comments

  1. Three Jack says:

    using that (il)logic, can i repave my driveway with a tax credit?

    and why should only wooden arrows get a tax credit, why not fiberglass or whatever other material is used to make arrows?

    instead of extending the tax credits, they should have ended all of them as part of a major reform to the antiquated system. they threw massive amounts of hard to find fuel on a bonfire.

  2. Toddrob says:

    Love to watch Marshall explain why this was good for the taxpayer…

    After Bailout, AIG Executives Head to Resort
    UPDATED: 11:31 a.m.

    Less than a week after the federal government offered an $85 billion bailout to insurance giant AIG, the company held a week-long retreat for its executives at the luxury St. Regis Resort in Monarch Beach, Calif., running up a tab of $440,000, Rep. Henry Waxman (D-Calif.) said today at the the opening of a House committee hearing about the near-failure of the insurance giant.

    Showing a photograph of the resort, Waxman said the executives spent $200,000 for rooms, $150,000 for meals and $23,000 for the spa.

    “Less than a week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation,”

    http://voices.washingtonpost.com/livecoverage/2008/10/after_bailout_aig_executives_h.html?hpid=topnews

  3. jsm says:

    “and why should only wooden arrows get a tax credit, why not fiberglass or whatever other material is used to make arrows?”

    The explanation I saw for this is that toy wooden arrows were being taxed the same $0.39 that was levied on more expensive hunting arrows. Most wooden toy arrows apparently don’t cost 39 cents to make, and the argument is that they shouldn’t have a tax that is higher than the price of the actual item, especially when toys were not the target of the tax when it was first levied.

  4. Doug Deal says:

    jsm,

    It was also for “professional” and “competitve” archers, not just hunters. It turned out that the boy scouts use this type of arrow to teach archery, so by trying to “get” those evil hunters and wealthy archery entusiasts, they also “got” boy scouts.

    Does anyone else find it wrong that we sue the tax code this way, when we keep in mind that the tax code is probably more pages than most people will read in their adult lifetime.

  5. Bill Simon says:

    Icarus,

    I too spoke with Isakson’s Senate office.

    HOWEVER…the fact that all these “expirations” were jammed into this bill to make it “sweet” points to the possibility that this “economic lifesaver” was created to GET THOSE SWEETNERS PASSED in camaflouge mode.

    And, we stil hve the issue (which was NOT addressed by Isakson’s office) of THIS section of thta law:

    SEC. 112. COORDINATION WITH FOREIGN AUTHORITIES AND CENTRAL BANKS.

    The Secretary shall coordinate, as appropriate, with foreign financial authorities and central banks to work toward the establishment of similar programs by such authorities and central banks. To the extent that such foreign financial authorities or banks hold troubled assets as a result of extending financing to financial institutions that have failed or defaulted on such financing, such troubled assets qualify for purchase under section 101.

    That is, America is offering to bail-out foreign central banks within this bill.

    There was an old high-school football chant we used to do when the ref made the wrong call. That chant is appropriate here:

    Nuts and bolts, nuts and bolts, we’ve been screwed!

  6. Icarus says:

    3J,

    Is your driveway used for business purposes? If so, yes. If you can articulate to the IRS why you would need to repave it in 7 years, you can accelerate that depreciation. This isn’t a giveaway to race track owners. It’s allowing the proper deduction for a very proper business expense.

    ToddRob: Around here, we call that a threadjack.

    Doug, that’s exactly my point. The same conservatives that are calling this pork are the ones that are demanding a better tax code. All of these “sweeteners” were already part of the tax code and set to expire. There’s no new cuts, save the AMT. No conservative is in favor of the AMT bracket creep.

    John, as said above, these aren’t new cuts, so in the absence of them, they would be new tax increases. We both agree we need lower deficits, but cutting spending is a better place to start. (And no, I don’t expect that to start any time soon, but that’s a separate argument).

    Bill, I’m glad to hear we finally agree that Tech is a high school football team, as that’s obviously a tech cheer.

  7. Chris says:

    Its not so much the pork as the TRILLION DOLLAR LINE OF CREDIT that W handed to Obama that I’m completely apoplectic over.

  8. Icarus says:

    “…as the TRILLION DOLLAR LINE OF CREDIT that W handed to Obama that I’m completely apoplectic over.”

    Well, yeah, there’s still that.

  9. I don’t understand why things that are unrelated to a bill have to be put in a “package deal”. Why can’t each item be a separate issue so the public can clearly see what is being voted on?

    If they want racetrack money, then create a bill that allows that, but separate from the bank issues. If they want an Alternative Minimum Tax, then create a separate bill for it.

    They weasel things into bills, because the key issue of the bill is so important that they can pressure some sort of bill to be passed, and what better way to get their pet projects approved, than to put them in such a serious crisis as the bank issues?

  10. GreenAllTheWay says:

    The committee on Oversight and Government Reform held a hearing on Tuesday at 10:00 a.m. Eastern time. to address and examine downfall of AIG, the world’s largest insurance company. The committee planned to discuss the financial excesses and regulatory mistakes that led to AIG’s government bailout.
    One of the items discussed was AIG’s expenditure of $440,000 for a corporate retreat at the St. Regis Monarch Beach resort in Los Angeles, Calif. These funds were spent on Sept. 22, a week after the Federal Reserve extended an $85 billion emergency loan to AIG to keep it from going bankrupt due to insurance liabilities.
    According to the receipt from the St. Regis, the eight-day company retreat was a lavish one — $139,000 was spent on hotel rooms, while even more money — $147,301 — was spent on banquets. Another $23,380 was spent on undisclosed spa treatments and another $6,939 was spent on golf. A full $9,980 was spent on room service and food and cocktails at the hotel lounge.

  11. John Konop says:

    YOUR BAILOUT MONEY AT WORK!!!!

    AIG execs’ retreat after bailout angers lawmakers

    NPR-Less than a week after the federal government had to bail out American International Group Inc., the company sent executives on a $440,000 retreat to a posh California resort, lawmakers investigating the company’s meltdown said Tuesday.

    The tab included $23,380 worth of spa treatments for AIG employees at the coastal St. Regis resort south of Los Angeles even as the company tapped into an $85 billion loan from the government it needed to stave off bankruptcy.

    The retreat didn’t include anyone from the financial products division that nearly drove AIG under, but lawmakers were still enraged over thousands of dollars spent on catered banquets, golf outings and visits to the resort’s spa and salon for executives of AIG’s main U.S. life insurance subsidiary.

    “Average Americans are suffering economically. They’re losing their jobs, their homes and their health insurance,” House Oversight Committee Chairman Henry Waxman, D-Calif., scolded. “Yet less than one week after the taxpayers rescued AIG, company executives could be found wining and dining at one of the most exclusive resorts in the nation.”

  12. Ga Values says:

    Saxby did not read the 409 page bill that he voted for but he was assured by Chris Dodd, Barney Franks , and Saxby’s LOBBYIST friends that everything was OK. The Lobbyist gave & Saxby Voted for the. Just Business as usual for our Senior Communist Senator.

  13. Doug Deal says:

    Ga Values,

    What politician did. It is about 407 pages beyond any politician’s attention span (including the title page), and doesn’t have any pictures.

  14. Icarus says:

    Bill, if you look up a few more lines in the original post, you might be surprised who used the word first.

    I’m quite familiar with the word. We lost to Vanderbilt at homecoming a few years ago.

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