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Bailout bill brings home the bacon

BY JAMES BERNSTEIN | james.bernstein@newsday.com

October 4, 2008

The $700-billion financial bailout package has been swiftly signed into law, with a hefty side of pork.

The legislation adds $110 billion in sweeteners, like a $2-million tax break to benefit manufacturers of wooden arrows for children - that were added to win the votes of some in Congress who had cast nay ballots.

Pork is nothing new in Congress, whose members often disguise such measures as "earmarks," which are added to larger bills and go virtually unnoticed by the public. Despite publicly decrying such measures, Republican John McCain and Democrat Barack Obama have voted for the bailout bill, saying it was necessary to restore confidence in the financial markets.

For those in Congress who complained about the staggering amount of the bailout bill, an estimated $110 billion more in earmarks can't make the measure more palatable, said Jared Bernstein, senior economist at the liberal-leaning Economic Policy Institute in Washington, D.C.

"The only thing I can say to defend it ... is that these [pork] measures were going to pass anyway" in some other bill, Bernstein said. "It's ugly and messy. I would have liked to have seen a clean bill up there."

Lots of the pork raised the hairs of the Taxpayers for Common Sense, a congressional watchdog group that tracked earmarks in the bill.

Aside from the $2-million tax break for the wooden-arrow manufacturers, which was sponsored by Oregon's two senators - Gordon Smith, a Republican, and Ron Wyden, a Democrat - there was an earmark that will allow racetrack owners to depreciate their facilities over seven years, saving them about $100 million. The earmark was part of a bill backed by Rep. Mike Thompson (D-Calif.) and Sen. Charles Schumer (D-N.Y.) two years ago.

Another earmark offers rum producers in Puerto Rico and the Virgin Islands a rebate on excise taxes worth $192 million over two years. The taxpayers group said the measure had the support of Donna Christensen, the Virgin Islands delegate to Congress.

Yet another earmark, sponsored by Rep. Don Young (R-Alaska), allows plaintiffs in the Exxon Valdez suit over the 1989 oil spill in Alaska to spread their tax payments on punitive damages over three years, cutting their tax bill by $49 million.

Steve Ellis, a spokesman for the taxpayers group, called the earmarks "crass," and said he doubted they really helped pass the bailout package. "By adding all these extraneous provisions, they [members of Congress] really muddied the waters," Ellis said. "The average American can say, 'Look at this. They can't deal with the real issue. They had to add in the old bacon they always do.'"

INCENTIVES

Examples of the 'pork,' or earmarks, in the financial bailout package, according to the Taxpayers for Common Sense.

Exxon Valdez.

Plaintiffs in the suit over the 1989 oil spill in Alaska can spread their tax payments on punitive damages over three years, cutting their tax bill by $49 million. Rep. Don Young (D-Alaska) supported the measure.

Wool. Cuts tariffs for U.S. makers of fabric that use imported yarn, and is worth $148 million over five years. Reps. Louise Slaughter (D-N.Y.) and Melissa Bean (D-Ill.), supported the measure.

American Samoa. Certain companies can reduce taxes on income earned there, at a cost of more than $33 million over two years.

Hollywood. Tax breaks for film and television companies that keep production in the United States will be extended, worth $478 million over 10 years. Rep. Diane Watson (D-Los Angeles), backed the measure.

Wooden arrows. Tax break benefits makers of children's wood arrows by $2 million over 10 years.

Racetracks. Owners will be

able to depreciate facilities over seven years, saving the industry $100 million. The earmark was part of a bill that had been backed by Rep. Mike Thompson (D-Calif.) and Sen. Charles Schumer (D-N.Y.). Rum. Producers in Puerto Rico and the Virgin Islands will get a rebate on excise taxes worth $192 million over two years.