The House of Representatives has passed historic legislation to bail out the troubled financial industry.

Rep. Jesse L. Jackson Jr.
(D) Illinois

To borrow the title of a classic modern novel, “Things Fall Apart.” In just decades, Americans have gone from Franklin Delano Roosevelt’s New Deal to George W. Bush’s Rash Deal.

During the last few days, my office has been flooded with phone calls from citizens throughout the country, expressing outrage and indignation.

To many, there’s something awry, perhaps even unseemly, about this hasty plan. It requires the government — which is running up huge deficits and record-breaking debt — to borrow and spend the funds of ordinary Americans — who are falling further behind and into poverty — to rescue superrich bankers and barons — whose obscene excess and avarice have helped to create the financial mess.

It’s Robin Hood in reverse, taking from the needy to give to the greedy.

In one colorful description, the Bush administration’s unprecedented $700 billion bailout plan was characterized as “cash for trash.” It takes private industries’ troubled assets off their books and dumps them into the public’s lap, further privatizing profits and socializing losses. In doing so, the plan’s proponents argued, cash and credit would once again flow, with benefits trickling down and the economy turning up.

But, from the outset, the proposal was seriously flawed.

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Steve Turnham
AC360° Producer

The bailout legislation passed by Congress today added $100 billion in tax breaks to the Wall Street rescue bill, the so-called “sweeteners.” The presumption was all that extra cash would tempt House members who voted against the first version to switch and pass the new version, and it did. But there was more to it than that.

The tax breaks were actually part of a prior bill that had support in the Senate, but was hung up in the House because budget hawks were insisting it be paid for without extra deficit spending.

In attaching the measure, Senate Majority Leader Harry Reid basically dared the House to accept the tax breaks, or take the blame for bringing down the economic rescue package. It’s a classic power play, and one that angered some House members.

Why would Senator Reid risk the economic rescue package by muddying it up with giveaways? The devil is in the details: the measure would give money to states with a lot of federal land — which doesn’t bring states any tax dollars — to pay for schools and government. It also would allow people in states without income taxes to deduct what they pay in sales taxes from their federal taxes.

Reid’s home state of Nevada will benefit from both - big time. It has a lot of federal land. It has no state income tax. Reid runs the Senate. Reid is up for reelection in 2010.

Some House members will benefit from the added $100 billion benefit; some are angry about it. And some fit both categories.

“I hate this like poison,” conservative Democrat Shelley Berkeley told the Las Vegas Sun, “but I think relief is necessary.” Berkeley is from Nevada.

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Ted Rowlands
CNN Correspondent

Morgan Doran did his best to stop the bailout plan. The 37-year-old Los Angeles attorney, who says he’s not a blogger, turned into one while on paternity leave for the past few weeks.

Between changing diapers and enjoying his newborn son he launched stopthehousingbailout.com, a full out assault against the bailout. Morgan, who works in the field of finance, says he thinks the government plan is “appalling,” and wanted to do everything in his power to educate people on the reasons why he doesn’t think this is good for the country.

Speaking by phone, Morgan told me the biggest issue he has with the plan, besides the “appalling” lack of detail, is the ridiculous notion that there is some sort of immediate catastrophe waiting if government doesn’t step in to save the day.

Morgan says everyone knew this was coming and yet just as lawmakers were set to leave town the White House and Treasury Secretary Paulson came running out to scare people into believing that a bailout is needed “right away” to avert dire consequences.

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House Majority Leader Steny Hoyer, speaks to the press in his office on the financial market turmoil on Capitol Hill, Wednesday.

Deirdre Walsh
CNN Capitol Hill Producer

House Majority Leader Steny Hoyer, D-Md, told reporters “on our side I think we’re not losing substantial votes.”

He said Republicans are still trying to add votes and “we’re now assessing where members are.”

He was clearly still unhappy about the process of having the Senate force this package on the House, but blamed Senate Republicans. “I deeply regret that the Senate refused to pass this. This was largely, I understand from Senator Reid, the refusal by Republicans to pay for tax cuts.”

Hoyer expected “minimal” losses from conservative House Democrats known as “blue dogs.” Hoyer pointed out that 25 of the 44 blue dogs voted for the bailout on Monday and do have concerns about the tax piece. “They don’t like and I don’t like the fact that the Senate jammed us, and put it on this bill in the end.” But Hoyer added, he believes these blue dogs who already voted for it will still support the package.

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Glenn Beck | Bio
Host of CNN Headline News’ Glenn Beck

Editor’s note: Glenn Beck is on CNN Headline News nightly at 7 and 9 ET and also is host of a conservative national radio talk show.

Dear America: Happy 300th Birthday!

It’s 2076 and we’ve just invented the time-fax machine. (Actually, “we” didn’t invent the time-fax machine, the State did — they pretty much control everything now.)

I’m faxing this back to you in 2008 because that seems to be the year we had the best chance to reverse our course and get back to the vision laid out by our founding fathers — a vision that didn’t include the government being in the insurance business.

I don’t have a lot of time (the State only gives us one 30-minute break per day) so let me give you some advice: Stop worrying so much about who runs the country and start worrying about who runs your towns, your states, and your Congress.

I know you’re all distracted by the presidential election, but for all the money and time poured into it, the truth is that you’re choosing between two roads that will lead you to the same destination. Sure, one may be the Autobahn and the other a two-lane highway, but you’ll end up at the same place either way.

Decades of Republicans and Democrats alike have all chipped in to lead you to where you are today. Believing that one person, from either party, can change that by themselves is a big mistake.

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Editor’s Note: The following are excerpts from an exclusive interview by Charlie Rose of PBS.

Charlie Rose: Are you satisfied with that rescue plan?

Warren Buffett: Well, I don’t think it’s perfect, but I don’t know that I could draw one that’s perfect. I’d rather be approximately right than precisely wrong, and it would be precisely wrong to turn it down.

We need — we have a terrific economy — it’s like a great athlete that’s had a cardiac arrest. It’s flat on the floor, and the paramedics have arrived. And they shouldn’t argue about whether they put the resuscitation equipment a quarter of an inch this way or a quarter of an inch this way, or they shouldn’t start criticizing the patient, because he didn’t have a blood pressure test or something like that. They should do what’s needed right now. And I think they will. I think the Congress will do the right thing. I think that they’ve — you know, they got into certain arguments and they start worrying about assessing blame, and there is a little demagoguery, but in the end, something this important, they’ll do the right thing. So this really is an economic Pearl Harbor. That sounds melodramatic, but I’ve never used that phrase before. And this really is one…

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Federal Spending Increased 4.4 Percent in 2007.

The federal government allocated $2.56 trillion in domestic spending for fiscal year 2007, up 4.4 percent from 2006, according to the U.S. Census Bureau. This and additional information on federal funding is included in two new reports being released today. Consolidated Federal Funds Report:

• 2007 provides a broad overview of how and where the federal government distributes funds. Statistics are broken out by federal department and agency, as well as by state, county and subcounty area. The second report, Federal Aid to States for Fiscal Year 2007, contains data on federal grants to state and local governments.
• Retirement and disability payments to individuals accounted for $783 billion (more than
  30 percent) of total federal spending. Of that amount, 80 percent, or $623 billion, went to Social Security recipients. Social Security was composed of retirement insurance payments
  ($369 billion), survivors insurance ($113 billion), disability insurance ($105 billion) and supplemental security income payments ($36 billion).
• Nearly half of all domestic government spending (excluding interest on the federal debt) went to Social Security, Medicare and Medicaid, accounting for $1.22 trillion. The one-year increase in spending for these three programs was approximately $198 for every person in the United States.

Other highlights from the Consolidated Federal Funds Report:

• Grants accounted for $496 billion (20 percent) of all federal spending. Medical assistance programs under the Centers for Medicare and Medicaid Services made up 41 percent of that amount, followed by highway planning and construction grants (12 percent).
• Procurement contracts accounted for $440 billion (17 percent) of total federal spending. Of this, defense contracts made up 67 percent, followed by other federal agency contracts (30 percent) and the U.S. Postal Service (3 percent).
• Salaries and wages accounted for $253 billion (10 percent) of total federal spending. Department of Defense payrolls made up 38 percent of that amount, followed by federal government civilian payrolls (37 percent) and the U.S. Postal Service payroll (25 percent).
• Per capita spending was highest for Virginia ($14,277), Alaska ($13,721), and Maryland ($12,569). The states that received the lowest per capita distribution of federal funds were Nevada ($6,032), Utah ($6,486) and Oregon ($6,736).
• The three states with the highest per capita social security payments were West Virginia ($3,039), Pennsylvania ($2,581), and Alabama ($2,496).
• Virginia led the states with the highest amount of defense procurement contracts, while California had the highest amount of procurement contracts for other federal agencies.
• California led the states with the highest amount of federal government civilian employee salaries and wages, while Virginia had the highest amount of Department of Defense and California led in the Postal Service.
• In addition to the $2.56 trillion in direct expenditures or obligations, the federal government committed $1.37 trillion in direct loans, guaranteed loans and insurance. Insurance coverage accounted for 86 percent of that total. Guaranteed or insured loans comprised 12 percent (including $60 billion in federal family education loans). Direct loans comprised the remaining 2 percent, led by federal direct student loans ($12 billion) and Commodity Loans and Loan Deficiency Payments ($4 billion).

House Minority Whip Roy Blunt, center, accompanied by House Minority Leader John Boehner, Rep. Eric Cantor, and Rep. Adam Putnam, speaks to reporters on Capitol Hill in Washington, Monday, after the House vote on the financial bailout package failed.

Barclay Palmer
AC360° Senior Producer

The Senate plans to vote on bailout Plan B between 8:30pm and 9pm tonight. A strangely precise schedule for a legislature so confident but so wrong in predicting that it had a bailout package on Monday. Especially since it has a couple other thingy-dingy bills to pass first tonight. If the Senate can function like a Swiss watch today, why can’t it every day?

Or can it?

And the House plans to vote on the Senate bill on Friday. That is, if leaders believe they have the votes to pass the bill. If they don’t, one of our most esteemed planning managers said, with irony and pith worthy of Ben Franklin,”Times are fungible.”

Editor’s note: Suze Orman answered your questions on AC360° tonight.  Here are the questions and her advice.

Anderson Cooper: The Dow’s climb on Wall Street finishing up 485 after yesterday’s record loss of 778. The Senate is supposed to vote on a bailout plan tomorrow night. Suze Orman is here to answer your questions on the wild ride. The bill the Senate will vote on tomorrow night will raise from $100,000 to $250,000 the amount the FDIC will protect in a bank. What does that mean? Is that a good thing?

Suze Orman: It’s a good thing in that people don’t have to go to more and different banks if they have more than $100,000. Does that help the little people? Who has $50,000? Maybe they have $50,000 in credit card debt. Very little people we’re talking about that will affect. For large banks and large businesses, it makes it easier for them to meet their payroll by dealing with one bank.

Anderson: We have a ton of questions on the website. John writes,

I’m 28 years old with no credit card or student loan debt, my condo is paid off, I have a great job. Should I be taking advantage of the great deals you discussed on your website yesterday?

Suze: Yes, my dear John, of course he should be taking advantage of it. He doesn’t have to use his money to get out of debt. How does he take advantage? How do you take advantage of what’s going on here?

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Willem Butler
Maverecon blog, FT.com

The US House of Representatives has voted to reject the Emergency Economic Stabilization Act - the $700bn Treasury-funded facility for purchasing and managing toxic assets held by the US banking system.

Opposition to the proposal came from two different sources. A few remaining libertarians and believers in unfettered free enterprise voted against. Even when they recognise the risk that a calamitous collapse in economic activity may result, they view this as a form of creative destruction that is an integral part of a Darwinian market economy. I don’t know anything about Gresham Barrett, a Republican congressman from South Carolina but his statement fits the bill: “My fear is the government will be forever changing the face of the American free market. Because I believe so strongly in the principles of the free market and the belief in freedom, I will be opposing this bill.” Those who genuinely hold these views are mad, but honest and principled. I wish them a good depression.

A larger body of nay-voters consists of populist rabble-rousers or, worse, politicians who know better but follow the whims, fancies and passions of their constituents, even when this means that before long the real economy risks falling off a cliff. The following statement by Ted Poe, a Texan Republican member of Congress is a nice example: “New York City fatcats expect Joe Sixpack to buck up and pay for all of this nonsense,”… “Putting a financial gun to the head of every American is not the answer.”

The dedicated followers of constituency fashion reckon that the date of the election is likely to be before the full impact of the financial collapse made likely by this vote will hit their constituents’ jobs and businesses. They put re-election before the economic health of the nation and the interests of their constituents. Opportunism guides them rather than principle. I wish them a rather nasty depression.

What is likely to happen next? With a bit of luck, the House will be frightened by its own audacity and will reverse itself. If a substantively similar bill (or a better bill that addresses not just the problem of valuing toxic assets and getting them off the banks’ books, but also the problem of recapitalising the US banking sector) is passed in the next day or so, the damage can remain limited. If the markets fear that the nays have thrown their toys out of the pram for the long term, the following scenario is quite likely:

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