By Martin H. Bosworth
ConsumerAffairs.com
October 3, 2008
The most sweeping economic legislation in decades became law today, as the House of Representatives passed the revised
$700 billion bailout package for Wall Street, and President Bush signed it quickly thereafter.
The bill passed 263-171, with 172 Democrats and 91 Republicans supporting it. 63 Democrats and 108 Republicans opposed it.
The revised bailout plan contained many tax breaks for businesses large and small, including alternative energy investments, disaster relief assistance. and a one-year extension of relief from the Alternative Minimum Tax (AMT).
The revised plan also increased insurance on bank deposits backed by the Federal Deposit Insurance Corporation (FDIC) from $100,000 to $250,000. The extension expires on December 31, 2009 unless renewed.
President Bush signed the bill within hours of its passage. "We have acted boldly to prevent a global economic crisis and proved we can maintain a leading role in the global economy," he said in an earlier statement.
"We have proven we could weather the economic crisis and rise to the challenge, by coming together in the spirit of cooperation to pass this legislation in a timely manner."
Treasury Secretary Henry Paulson also hailed passage of the bill. "By acting this week, Congress has proven that our Nation's leaders are capable of coming together at a time of crisis...to do what is necessary to stabilize our financial system and protect the economic security of all Americans," he said.
"The American people will appreciate the leadership of their elected representatives and senators who took bold action to help stem a severe credit crunch that threatens to cost many jobs and undermine access to credit for working Americans," Paulson said.
Oddly, the Dow Jones Industrial Average (DJIA) plunged several hundred points immediately after passage of the bill was announced, unnerving investors who had expected a surge in stock prices. The Dow plunged 770 points after the House rejected the first bailout plan 228-205 on Monday.
Switching sides
The House, whose members face reelection every two years, was perceived as acting largely out of fear of backlash from angry voters, who flooded the House's phone lines with calls opposing the bailout and jammed the House's Web servers as they sought more information about the plan.
But many House members from both parties who initially opposed the bailout switched sides after the Senate passed the revised version on Wednesday. The Economic Emergency Stabilization Act (EESA), a revised version of the original three-page plan provided by Paulson, was combined with numerous stalled pieces of legislation designed to mollify nervous Representatives.
The bailout's passage also solidified as more gloomy economic news came out in the intervening days, including California's request of $7 billion in federal aid to shore up its nearly empty coffers.
Republican governor Arnold Schwarzenegger said that without immediate assistance, California would run out of money by the end of the month and would have to shut off numerous public services. He urged Congress to pass the bill quickly in order to open up the credit markets and get loans flowing again.
Perhaps not coincidentally, the Labor Department released its latest economic report on Friday, confirming that the economy had shed 159,000 jobs in September. Employment rolls had diminished for nine straight months, resulting in 760,000 total job losses.
Voters remain angry
But even the continuing economic doldrums were not enough to assuage many angry taxpayers that the bailout was necessary. The plan is still widely perceived as a giveaway to protect greedy Wall Street bankers who got themselves in trouble, at the expense of taxpayers who are now on the hook for nearly one trillion dollars in assets, the true worth of which is still unknown.
ConsumerAffairs.com continues to receive hundreds of complaints from readers demanding to know why their elected officials voted to pass the bailout, and what the true consequences, and cost, will be.
