Friday, October 3, 2008

Bail Out

The Senate-passed bipartisan economic rescue plan improves the original House bill by adding significant new protections for taxpayers on Main Street.

Increases the amount of bank deposits insured by the government from $100,000 to $250,000 through 2009. The Senate-passed bipartisan economic rescue plan protects individuals and small business owners by increasing the amount of bank and credit union deposits insured by the government. The current limit of $100,000 was set 28 years ago and has not been adjusted for inflation. This will help small business owners and entrepreneurs meet their bottom lines and make payroll. This provision was put forward by House Republicans during last week’s bipartisan talks only to be rejected by Democratic negotiators.
Protects 21 million middle-class families from getting hammered by the Alternative Minimum Tax (AMT) for tax year 2008. The Senate-passed bipartisan economic rescue plan protects working families from the AMT – an unfair tax, initially intended to affect only the wealthy, that middle-class Americans were never meant to pay. Without action, 21 million middle-class families will be hit with an average tax hike of $2,500.
Extends critical energy tax credits and incentives to encourage conservation and the development of renewable energy technologies. Just days after the American people saw the 27-year ban on exploration for American offshore energy expire, House Republicans continue to push for an all-of-the-above energy strategy that helps lower gas prices and lessens our dependence on foreign countries that don’t like us very much.
Extends tax deductions on state and local sales taxes. In past years through Republican tax relief, taxpayers have been given the option to claim state and local sales taxes instead of state and local income taxes when they itemize deductions. This deduction mainly benefits taxpayers in states with a state or local sales tax but no income tax — including Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington and Wyoming.
Reaffirms the steps the SEC has taken to ease harmful “mark-to-market” accounting rules. The Securities and Exchange Commission (SEC) has issued accounting guidelines that allow banks to move away from “mark-to-market” accounting rules – outdated regulations that artificially undervalue good mortgage assets and have helped exacerbate this economic crisis. It was House Republicans who insisted that the bipartisan economic rescue plan include “mark-to-market” reform.

As before, this emergency legislation is a rescue for Main Street and American taxpayers. Republicans successfully included measures to ensure Wall Street pays its fair share and secured maximum taxpayer protections for Main Street.

Federal insurance program protects taxpayers, forces Wall Street to share the burden: Requires the establishment of an insurance guarantee program that in lieu of purchasing assets with taxpayer funds is available to insure assets at no cost to the taxpayer. Costs would be fully paid for by participating companies (i.e. those receiving the assistance). Assets insured by the program would count against the total funds the Secretary would otherwise have available to make purchases.
Up-front Treasury authority cut in half: Secretary Paulson’s original proposal sought $700 billion in up-front, immediate authority. The new economic rescue plan cuts this up-front authority in half. The Treasury would have $250 billion in immediate authority, with another $100 billion available after the Secretary reports to Congress. Congress has the authority to withhold the remaining $350 billion.

Taxpayers protected against losses: Taxpayers would be first in line to recoup losses from participating financial institutions in the event they fail or lose money – not shareholders and certainly not corporate executives.

No golden parachutes for Wall Street: Irresponsible corporate executives at participating institutions will not be rewarded with golden parachutes or severance pay.

Protection for community banks from Wall Street excess: The rescue plan helps local community banks across the country by allowing them to write off losses on Fannie and Freddie mortgage assets they hold.
A temporary program: Treasury’s authority to take toxic, “illiquid” assets off the balance sheets of financial institutions expires on Dec. 31, 2009. The Treasury Secretary can extend the authority for an additional year upon certification to Congress.
House Republicans successfully ensured this critical economic rescue bill did not become a vehicle for partisan, special interest demands.

No liberal slush funds: Democrats wanted to direct 20 percent of the revenues from the program into a slush fund for ultraliberal allies like ACORN. Republicans successfully demanded it be dropped.

No trial lawyer giveaways: Democrats wanted trial lawyer giveaways that would punish responsible borrowers and help their political allies by allowing bankruptcy judges to unilaterally rewrite mortgage terms. Republicans successfully demanded it be dropped.

No Big Labor paybacks: Democrats wanted to continue their two-years-long Big Labor payback by giving union bosses seats on the boards of participating financial companies. Republicans successfully demanded it be dropped.

Bipartisan oversight and accountability: Democrats wanted to stock a seven-member oversight board with five Democrats and only two Republicans. House Republicans successfully demanded the panel be truly bipartisan with an equal number of Democrats and Republicans

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