The bill is a combination of the 110-page House bailout bill with a FDIC temporary increase in the account size that can be insured limit (which is not published -- only Sunday’s 103 page House bill draft is available) plus various add-ons that are mainly tax bills already “approved” by both House and Senate but stuck and not passed because of various reasons ("tax cut not offset with expense cut" Blue Dog plus GOP opposition in House, "political timing must be post-election" in the Senate). But there are a few additional items that I am told that are also already “approved” by both House and Senate, such as:
* The bill deals with creating parity for the insurance treatment of mental health problems.
* The bill details how state and local government will be given funds in lieu of taxes on federal lands within their boundaries.
And there are two
National Security provisions that read like they are CYA for Bush
Administration crimes and may well appeal to the House GOP:
* The bill makes permanent authority for undercover operations.
* And, the bill makes permanent authority for disclosure of information relating to terrorist activities.
And then we have
an “Energy” section that reads like more tax spending and has its own
title in the bill -- The Energy Improvement and Extension Act of 2008.
which would:
* Extend the renewable energy tax credit for wind and refined coal facilities, and expands use of biomass.
* Extend tax credits
for marine and hydrokinetic research, which involves energy created
from waves and tides, as well as solar and fuel-cell research.
* Allow energy credits to be counted against the alternative minimum tax.
* Give steelmakers tax credits for purchase of renewable fuels.
* Let utilities issue tax-free bonds to promote use of clear, renewable fuels.
* Expand tax credits for investment in coal gasification programs.
* Extend by four years a temporary increase in the coal excise tax to fund black-lung disability programs for miners.
* Provide tax credits for carbon sequestration efforts.
* Allow producers of cellulosic bio-fuels to seek accelerated tax depreciation.
* Double the tax credit for production of bio-diesel and renewable diesel fuels.
* Extend a tax credit of $2,500 to plug-in electric hybrid vehicles. (should be larger IMHO!).
* Allow fringe benefit reimbursement for qualified bicycle commuters.
* Broaden the scope for issuance of conservation bonds.
* Extend current deductions for energy efficient commercial buildings and homes.
* Provide small tax credits for purchase of energy efficient dishwashers, washing machines and refrigerators.
* Accelerate tax deductions for use of smart meters that help a consumer regulate energy use to reduce peak-hour consumption.
* Reduce by 3 percent the tax deductions on income enjoyed by
producers, refiners, transporters and distributors of oil and natural
gas.
* Eliminate the difference in tax treatment of foreign oil and natural gas production and foreign oil-related income.
* Extend and increase by 3 cents a barrel the oil spill liability tax.
And then there is a section that admits it is specifically directed at the Tax Code which would:
* Raise the
exemption level of the alternative minimum tax from the current
$66,250/$44,350 for joint or single filers to $69,950/$46,200.
* Extend tuition deductions.
* Extend certain deductions for elementary and secondary school teachers.
* Extend an additional standard deduction on real property taxes for non-itemizers.
* Continue tax-free distribution from retirement plans to charities.
* Extend and modify the research tax credit.
* Extend restaurant improvement credits.
* Extend the tax credit for mine-rescue team training.
* Extend the tax credit for advanced mine safety equipment.
* Accelerate depreciation of business property on Indian reservations.
* Extend cost recovery period for motor racing tracks.
* Extend work opportunity tax credit for Hurricane Katrina employees.
* Extend increased rehabilitation credit for structures in Gulf of Mexico opportunity zone.
* Extend tax credit for investment in the District of Colombia.
* Increase tax deduction for charitable contributions to food inventory.
* Increase tax deduction for charitable book giving.
* Raise to $8,500 the income threshold for calculating the refundable portion of a child tax credit.
* Exempt from excise tax certain wooden arrow shafts for use by
children. (prior tax on hunting arrows accidentally hit kid arrows
killing industry in Oregon).
* Clarify income averaging for settlement amounts received in connection with Exxon Valdez litigation.
* Provide temporary tax relief for areas damaged by Midwestern storms, tornadoes and flooding and by Hurricane Ike.
And finally we have the House Bailout Bill as adjust for yjat FDIC insurance change that would:
* Provide the government
an equity stake, through non-voting or preferred stock, in companies
that are unloading bad assets. If these companies go bankrupt, these
warrants convert to a type of debt that places the government at the
head of the list of creditors in any bankruptcy proceeding.
* Give the Treasury secretary broad discretion to buy virtually any
distressed asset in an effort to get it off the books of a troubled
bank or financial firm and help unclog the credit markets. This is
called the Troubled Assets Relief Program, or TARP.
* Provide $250 billion immediately to purchase mortgage-backed
securities and other troubled assets, another $100 billion with the
president's authorization and the remaining $350 billion would be
subject to separate congressional approval.
* Give the Federal Deposit Insurance Corp. the ability to borrow
without limit from the Treasury to help stabilize banks it regulates,
both large and small. This isn’t in the House legislation.
* Allow the FDIC to raise deposit insurance to $250,000 from the
current $100,000. Affects the sum of deposits, not each account, in a
depositor's name at any given bank. This too isn’t in the House
legislation.
* Require the comptroller general to monitor and evaluate TARP's
performance, especially whether it is helping to prevent foreclosures,
providing stability in financial markets and protecting taxpayers. The
Government Accountability Office will have authority to order
corrections in the TARP effort.
* Order the comptroller general, the nation's chief auditor, to report
back to Congress by June 2009 on whether the government should curtail
the ability of banks and others invest with borrowed money. Investment
banks borrowed $30 to $40 against every $1 of their own capital they
invested, helping create today's global financial crisis.
* Limit courts from issuing restraining orders or injunctions against
the Treasury secretary unless alleging a constitutional violation. In
those cases, injunctions would have to be handled on an expedited basis
by federal courts. Significantly, there is no limited liability
expressed that would necessarily protect the federal government from
lawsuits by investors when the government purchases distressed assets.
* Create a special inspector general for the TARP program, to supervise
and audit the purchase of distressed mortgages and other bad assets.
* Raise the nation's debt ceiling to $11.3 trillion.
* Hold hearings on the effectiveness of the program and issue a special report on proposed regulatory reform.
* Reaffirm that the Securities and Exchange Commission has the
authority to suspend an accounting rule that some critics think has
exaggerated the deflated prices of the toxic mortgage bonds at the
heart of the financial crisis. The practice, called mark-to-market
reporting, requires banks and other financial firms to report the
present-day value of distressed assets that have a hold-to-maturity
value. This also is called fair-value reporting, and it was implemented
after the Enron scandal to discourage reporting of inflated prices.
* Limit the tax write-offs for executive compensation above $500,000
for companies that sell distressed assets to the government.
* Prohibit "golden parachutes" for executives of firms that are selling
assets directly to the government. If the government purchases from a
firm, via auction, $300 million or more in troubled assets, similar
limits on bonuses and other executive compensation would apply.
A sad note on what is not in the bill that was originally promised:
There is still no salary cap on the CEO -- remember the promise that the CEO should “make no more than the highest paid government employee -- the President’s $400,000”? The bill will be presented to the House under a no amendment rule, so our Financial CEOs will continue to get their 10’s of millions annual salary despite the mess they have caused and their use of the bailout bill to save their company and their job.
William Chirolas brings 40 years of real-world business experience in
local, state, national, and international tax, pensions, and finance to
the world of blogging. A graduate of MIT, he calls the Boston area
home, except when visiting kids and grandkids. He can be reached at: