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Lawmakers Approve Pork-Laden Bailout Bill

posted on October 3, 2008

Hello, I'm Mark Pearson. Congress wrapped up a tumultuous week Friday approving a $700 billion financial industry bailout, but only after lawmakers included more than $110 billion in tax breaks for businesses and the middle class.

The centerpiece of the rescue plan authorizes the government to spend billions of dollars to buy bad mortgage-related securities and other devalued assets held by troubled financial institutions.

That, advocates say, will allow frozen credit to begin flowing again and prevent a deep recession.

The landmark rescue bill also raises the ceiling on federal insurance for bank deposits from $100,000 to $250,000.

In the wake of the House's defeat of similar legislation on Monday, the Dow Jones Industrials plunged 777 points in its worst single-day loss in history. The rescue plan found new life in the Senate after lawmakers tacked on a wide range of tax breaks. That proved to be the deal-maker and the bailout won subsequent approval in the House and a speedy signature from President Bush on Friday. But, Wall Street was not impressed, and the Dow closed 157 points lower.

While major financial institutions and Wall Street clearly are the chief beneficiaries of the rescue plan, the bill also includes $110 billion worth of so-called, "sweeteners." And considering the wide range of recipients, some special interests may find themselves quoting the late Jackie Gleason as they consider, "how sweet it is!"

Lawmakers Approve Pork-Laden Bailout Bill Congressional leaders spent much of the past week scrambling to prop up the nation's financial institutions with an unprecedented infusion of federal funds. In an effort to entice a reluctant House of Representatives to endorse the bailout proposal, Senate leaders attached a litany of additional "sweeteners" to a $700 billion package that ballooned to more than $800 billion.

The so-called sweeteners include a series of agriculture-related tax incentives.

The bill extends a 30 percent tax credit through 2010 for gas stations that install E-85 pumps.

A tax clarification given to potential ethanol pipelines that match with traditional gasoline pipelines.

An extension of the $1 per gallon biodiesel production credit and the 10-cent per gallon small-biodiesel producer credits to the end of 2009.

Wind energy also received a shot in the arm under the bailout bill with a one-year extension of the wind energy production tax credit. The wind energy tax credit was set to expire in December but will now stretch to the end of 2009. Solar power also garnered attention with a 30-percent investment tax credit for solar energy properties until the end of 2016.

In addition to renewable energy, the bailout bill included disaster assistance provisions for farmers affected by hurricane damage and this past summer's Midwestern floods. Rural schools may also receive a boost from the bailout bill with a provision that infuses $3 billion towards some rural districts.

But agricultural and rural provisions were not the most controversial sections of the bailout proposal. Critics blasted lawmakers for attaching earmarks for everything from Puerto Rican rum sales to wool research funds.

Tags: agriculture bailouts Congress economy government industry money news