.
October 3rd, 2008
02:02 PM ET

The new bailout – a sweeter deal

[cnn-photo-caption image=
http://i2.cdn.turner.com/cnn/2008/images/10/02/art.whitehouse.jpg%5D
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.

Another Nevadao lawmaker to watch, Republican Dean Heller, voted no on the original bill, and has not said how he plans to vote on the bill comestoday.

As the House votes on the bail out right now, the big question today: will the "sweeteners" alienate more lawmakers than they attract?

Reid is gambling that the pressure to pass a bailout will be too great, and that any blowback for adding another hundred billion dollars onto the debt burden will be more than offset by the political payoff back home.


Filed under: Bailout Turmoil • Economy • Raw Politics • Steve Turnham
soundoff (40 Responses)
  1. Jan from Wood Dale IL

    Not only has our Congress given Treasury Secretary Paulson a blank check for this bailout, they have approved having him be on the oversight board assigned to oversee his actions. This is so disgusting and proves once again that Congress is NOT looking out for the people they were elected to represent.

    October 3, 2008 at 8:03 pm |
  2. Ed

    John McCain keeps saying he will get rid of the pork and make them famous. But it has just been proven that our system does not run without Pork. Pork is what got the bill passed and according to McCain, I guess he would not have signed it as President!

    October 3, 2008 at 4:51 pm |
  3. Megan Dresslar (Shoreline, Wa)

    No way!!! I am so scared of bailout..... I understand all people are so frustration about bailout, I agree with people how they felt! I disagree the bailout, or the house bailout already passes! what they want us to pay everything, I am so disgusted with bailout, they will lose their homes, jobs and gas! I am so confused right now....... I hope they agree with me..... Thanks.

    October 3, 2008 at 4:46 pm |
  4. nigel sampson

    For all those on Wall Street who have fleeced America, and those policiticians that think they have a cushy job and don't have to do anything except spend the taxpayers money, beware. America is not what it used to be. The power is shifting. China will become the economic force in the next 20 years, and they will be the ones who dictate world economic policies. Look at history. Rome became isolated, and fractured. It was thought it would never fail. Is the same happening here? , we have poor foreign relations, bad economic policies, unregulated Wall Street practices, and unless politicians do their jobs, America will end up like the Roman empire. It can happen!!!

    October 3, 2008 at 4:45 pm |
  5. Julie A

    I can't get the song American Pie out of my mind. Not the words really but the tone of the song. The ethereal portrait that it's America but it's not. Weve lost our way and must set about finding it again. You can look at what's happening and sense the wolf pacing behind the door. What feelings of utter despair and hopelessness caused a 90 year old woman to choose the barrel of a gun as sheriffs were pounding at her front door? Countrywide Lending did everything but put an apple in her mouth – now she fights for her life. Fannie Mae helped seal her fate. AND WHAT DID THIS COUNTRY DO??? We kissed the feet of those who condemned her. We may have needed the package [and I say 'MAY'] but there are precious many we can't turn our backs on. Those who are joining the ranks of underprivlidged and underserved. Disabled vets put out by our country as if on an assembly line. The homeless. It's mindbending to face the realities of an America that could be and see what must be done. We first must peer through the looking glass and acknowledge what looks back.

    October 3, 2008 at 4:45 pm |
  6. Craig Sellars

    I'm glad to finally know what an "injection of investor confidence" looks like. Negative 157. Perhaps Wall Street needed to sell of some stock to pay for tonight's champagne?

    October 3, 2008 at 4:41 pm |
  7. Vicki

    Who else noticed how Gov. Palin set up Senator Biden before the debate even started by whispering to him if "she could call him Joe?" It was a perfect set up for her to then say "Oh no, Joe, say it ain't so"! If I wanted a comedian as V.P., I would vote for Whoopi Goldberg. Ms. Goldberg is a better comedian, more sophisticated and certainly more qualified. Please, stop her from making our country look so unrefined. Her "Joe six pack" , and soccer mom" comments don't need to be in the political areana!!!

    October 3, 2008 at 4:41 pm |
  8. Gary Chandler in Canada

    pamela moreno – whether with the economy, human rights, and other spheres there is confusion about 'wildness' and calling it 'freedom'. Freedom, unlike with animals is the ability choose between right and wrong, while wildness is doing what one wants, without rules and regulations.
    This Bile OUT just opens the doors to more people living beyond their means, which is the ROOT of the 'crisis'. Sure, it will get the 'economy going again'; down the same hill!
    Yes, 'oversight' is needed on Wall street, but people should not be ALLOWED to borrow beyond their incomes, AND interest rates should NEVER be as high the 'usury' rates on credit cards!
    How close is America to the men from the World Bank coming in with their suit cases? It happened in New Zealand awhile back.

    October 3, 2008 at 4:38 pm |
  9. Al

    Congress....you fell for it again..Mr. Bush could've gotten it passed faster if he would've there were "WMD's embedded in the market that would surely be an enormous risk to the America people." It is a shame how this sooooo does not represent the intelligence of America but that of our Congressmen

    October 3, 2008 at 4:37 pm |
  10. larry

    Gotta love Barney Frank, even he gets more $$ from Fanny than Barak does.
    Watchdog groups including Taxpayers for Common Sense have been tracking some of these obscure tax breaks for years, and have published the most glaring examples. They say the small-print provisions represent billions in tax breaks for certain American industries, and were added as "sweeteners" to encourage reluctant House members to approve the bailout bill.

    Tucked into pages 262 and 263 of the bill, for example, are provisions that will aid the manufacturers of "certain wooden arrows designed for use by children." The bill will exempt the arrows from an excise tax of 39 cents. There are also tax breaks for race-track owners, for rum imported from Puerto Rico, for worsted wool makers, Hollywood film and television production companies and on and on.

    "This is unfortunately how Washington works," said Keith Ashdown of Taxpayers for Common Sense. "Lawmakers piled billions of dollars of pork into the bailout bill and dared detractors to vote against it. Many of these provisions are tax provisions that benefit narrow interests that have been waiting to hop on a legislative train that was leaving Washington."

    October 3, 2008 at 4:36 pm |
  11. pamela moreno

    Freedom definitely has a price...our government has the freedom to make short-term decision that have long-term consequences, our "elected" officials have the freedom to "sweeten" the pot with incentives that hardly have anything to do with the majority of middle class America, our government has the freedom to burden it's hard-working, tax paying citizens with more debt than we will ever be able to pay, our large financial institutions have the freedom to make HUGE mistakes and have the govenment change their diapers...I could go on and on...Since when does Freedom carry such an unnecessary price tag?

    October 3, 2008 at 4:18 pm |
  12. Al

    Man.....we were just robbed. I feel just like the victim of a real robbery. On national television. AMERICA was just robbed HELP!! And they had the nerve to add pork to the bill..lol They're still playing politics with our money...The Bible says "thou shall not steal"; the government will have hell to pay for this deceit.

    October 3, 2008 at 4:08 pm |
  13. Mary Jane Dunn

    Give us a list of all the "sweeteners", and the names of Congressmen who were "persuaded", (a.k.a. bribed) by the add ons.

    I want to know who not to vote for in the future!

    October 3, 2008 at 4:07 pm |
  14. Tim

    Angry is not the word that would descibe the feelings of the Main St American people at this point. I don't feel bad for the poor Senators that are trying to play both sides of the fence. If you voted YES, expect to be serving your last term, case closed, no excuses!
    You have failed us again.

    October 3, 2008 at 4:05 pm |
  15. msnola60

    What amazes me is that when hurricane katrina hit the gulf coast everyone was complaining about how much monies we received. We lost everything. I, a 61 year old still dislocated trying to rebound..after three years. I still can't find a job. I have contributed to society but the RICH PEOPLE get the BAILOUT. Now, we have more people that need assistance due to hurricanes, and the government is going to take it's time. This decision (the bailout) was made in less than a week. Here it is three years later and we (hurricane katrina victims) are basically still hurting. There is something wrong with this picture.

    October 3, 2008 at 3:58 pm |
  16. Jim

    I personally feel that no matter what the people were going to get the shaft because if the bill wasnt passed, then these businesses were gonna literally stop doing their job, which is helping people get into a home, buy a car, etc. And with todays prices it is next to impossible to jsut go out and afford to buy even a second hand car with cash on the barrelhead. On the other hand, the people are shafted because we have to foot the bill for these people that messed up. So no matter which way you go, guess who is losing in the end???? THE PEOPLE!!!!! Seems like no matter what the people have to keep bailing out the govt for everything. I always thougth that the govt was for the people, not for everyone else. Maybe we ought to call in some of thsoe debts owed to us from these other nations we ahve given money to. But that would never be even mentioned because they are too poor. Well, guess what, america is sliding even worse that way rite now. Hate to see what this is all going to be like in even a couple of months

    October 3, 2008 at 3:52 pm |
  17. mark hoffman, Phoenix AZ.

    That Harry is no fool. He knows who's in charge. Now where can I apply for my bailout? I owe less than 39K on my mortgage and I don't own a car so it's not like I would be breaking the bank or anything. I've also been a good doobie by paying off all loans and finally getting rid of ALL my credit card debt over the last few years, so surely I deserve something!

    October 3, 2008 at 3:41 pm |
  18. Chris

    Each Person who added and benefited from the earmarks, should be FIRED. The trials should be held on CNN, they should suffer public humiliation and embarassment. They are stealing money from the citizens of this country. The ironic part to this situation is, credit standards won't revert back to Pre-Crisis levels, Banks and businesses have learned a tough and painful lesson, many citizens will not have access to credit, still be in foreclosure, and worrying about their jobs. But they get a huge fat tax burden.

    October 3, 2008 at 3:32 pm |
  19. Dawn

    The American taxpayer was robbed today. The bailout, not even guaranteed to work, will surely line the pockets of corporate crooks. The struggling homeowner, however, loses. Perhaps I can call the wooden arrow factory, who benefits from this deal, to see if they are hiring. This is absurd, and Congress has used fear and greed as a tactic to get this passed. I noticed W also didn't waste any time to sign this into law...more money for his buddies. This should make every real American sick and we should all be outraged. Vote Independent this November. Do not support any candidate who supports robbing you.

    October 3, 2008 at 3:31 pm |
  20. Cynthia

    So it goes . . . Wall Street gets to keep its money houses while Main Street Americans keep losing theirs.
    How ironic, the disgraceful actions by our government officials, the grim reapers of sweeteners, leaves a very bitter taste to the the rest of us! !

    October 3, 2008 at 3:21 pm |
  21. Lynsey

    Anderson,
    Can you please help me understand how a bill like this got through? What are our polititians doing? The two candidates running for president talk about getting rid of lobbyists and special interests, so please explain to me why they would have voted for this? I didn't realize that wooden arrows were so important to our economy, but what do I know?

    October 3, 2008 at 3:07 pm |
  22. Jane Link

    How could these tax breaks be added to this bill? Is this not what folks have been railing about, pork? Who added these tax breaks and for who are they trying to sweeten the deal? What in the hell is going on?

    Didn't you love GA Rep Paul Broun and his cow pie and marshmallow analogy. Such a proud moment for us Georgians. Yeehaw.

    October 3, 2008 at 2:57 pm |
  23. Audrey C.

    I just watched the press conference given by Pelosi and her pals. It was a joke. Pelosi and her fellow Democrats congratulated each other for being able to work with the Republicans. They also took the time to give credit to Obama. So much for bipartisanship. And on that same note, I have to give the Senate credit. From what I saw, they managed to stay neutral at their press conference and really avoided giving credit to their candidates.

    October 3, 2008 at 2:56 pm |
  24. Rod in Allentown PA

    We, the taxpayers, were sold out today by a bunch of sheepish politicians. We are now one giant step closer to Socialism, and the rest of the world knows it. Who in God's name is left to stand up for those of us who actually believe in this Country? We reap what we sow. I urge each and every American taxpayer to get a list of those politicians who supported this pork filled bill, and campaign against them in future elections. This includes Senator Obama and McCain. There is an alternative that will send a clear message. Cast a vote for Ralph Nader as a protest to this sellout. This is a sad day for America, and history may well prove it as one of the worst days in our history.

    October 3, 2008 at 2:54 pm |
  25. Goodwin

    I'm a bit surprised our elected Representatives opted for Marxism. But that's what they did. Look up the definition of Marxism, and that is exactly what we have now with this bailout. Marxism ... a form of Communism. Say goodbye to the Constitution. Happy now?

    October 3, 2008 at 2:53 pm |
  26. Mario Ortiz

    After this bill has passed how can I get some Help to reduce my mortgage and property taxes so I can keep my HOUSE?
    Please Help me.
    Mario

    PS. my credit at this time is NOT so good.

    October 3, 2008 at 2:43 pm |
  27. Catherine Greene

    These law makers are disgusting with their political agendas. This "sweetener" is obviously sweeter for Reid and Nevada during this re-election season. But what infuriated Obama the other day at the failure in passing the so called bail out bill is that failure to do so apparently will have far reaching implications and that the economic protection of the middle class American is at stake. One of the many reasons I like Obama so much. The collapse of AiG, et al would send this country careening into another depression, and although a bailout on the premise of saving these CEO'S is quite unpalatable, this is not the case. We are trying to avoid a Depression. Aside from no golden parachutes, hopefully, there will be some accountability on Wall St. as well.

    October 3, 2008 at 2:40 pm |
  28. Sharon

    This is a betrayal of the American people. As much as you guys want to "report" that American's were 50/50, I don't believe it for a second. I have been to blog after blog. Overwhelmingly very angry at our representatives for voting to pass this. It is the worst betrayal of the American people yet. I think you will see a BIG change in Washington this November. If our representatives will not vote according to their constituents requests, then we will vote them out.

    October 3, 2008 at 2:33 pm |
  29. Patrick of Ohio

    The flawed failout has passed. Enjoy these next few weeks of fairly good economic confidence. Then enjoy the next few years of more failures, inflation, and and letting CEOs keep running all over our economy.

    October 3, 2008 at 2:31 pm |
  30. Mary D.

    There is no proof that this bailout is going to work. All the earmarks on the bill are ridiculous. Has John McCain of Barack Obama stood up to the porkbarrel spending? And how much would it have cost if they had gotten rid of all the earmarks?

    October 3, 2008 at 2:26 pm |
  31. Maggie B

    Shame, shame, shame on Washington. Time will tell if the rescue plan helps the American economy. Personally, I don't think it will. Hopefully, Washington will not be dealing with another 'economic crisis' in the days to follow.

    The USA is going deeper into debt – your debt load is enormous! Your great, great grandchildren will still be paying and all for what! Mainstreet Americans do not benefit from this plan. Once again, Washington and Wall Street are the benefactors.

    October 3, 2008 at 2:15 pm |
  32. Leigh

    Passage of the BAILOUT package just goes to show that our lawmakers can still be bought. How come they rejected the bill the first time, and when the "sweetners were added it suddenly became passaable. Just hang a big sign outside of congress that says FOR SALE to highest bidder? The adding of so much crap to the bailout just proves that it will be business as usual in Washington. If the bailout was so important to the economy, why did they have to add an extra 110 billion dollars to it? This was disgusting and I sincerely pray that the people who voted for this get voted out of office SOON.

    October 3, 2008 at 2:01 pm |
  33. Glynn , South Carolina

    We need to know who put in the PORK ...it needs to be made public so that we can see who the real crooks are , and which politicians are really trying to help the American people .....I would hope that CNN would inform the people on Main Street who these politicians really are trying to help ......Glynn

    October 3, 2008 at 2:01 pm |
  34. tom cassidy-florida

    What happened with McCain voting for this bill ? I must have heard him a dozen times, " I will stop earmark/pork barrel spending (wave pen) and I will make those responsible famous ". This bill has pork for rum makers, arrow makers, movie makers, etc. What about his repeated campain promise ???

    October 3, 2008 at 1:58 pm |
  35. J from DC

    Truth is most of us at home have no idea of what is going on with this decision. How can you trust someone’s else’s math, when everyone keeps coming up with a different answer. Somewhere along the line, the problem is so complex, and the solutions so divers, that the mathematicians can’t be trusted. This is a pice of work, that only time will tell us the truth behind. Just hope the next president can manage to help the rest of us.

    October 3, 2008 at 1:57 pm |
  36. Cheryll

    So they passed the bailout. GRRR. I understand the banking "need". Stop foreign aid for one year and we would have all the $$ you need. I fail to see why I the average person who is scrimping and working to pay my bills should be forced to subsidize not only irresponsible banks, but also the film industry and auto racing. Give me a break!! I am much less than happy!!! Let the voters speak over the next year.

    October 3, 2008 at 1:50 pm |
  37. Linda

    Everyone makes choices in how they live and how hard they work. Telling the American people that the "rich" will take care of them is insane. It's like telling your kid who refuses to participate in his little league game and just stands in the outfield chasing butterflies "good job". We USED to EXCEL because WE ALL contributed and NO ONE asked for a free ride because we overspent and got into debt. We asked the government for help in an emergency NOT to help us pay our mortgage or credit card debt. Let's go back to those days when Government was a partner NOT a crutch. America is still the land of opportunity anyone can succeed with hard work...unfortunately Americans are now fat lazy slugs who want something for nothing.

    October 3, 2008 at 1:49 pm |
  38. Cindy

    Well the bailout bill passed the House so I guess the "sweeteners" more than made up for what they didn't like about the bill originally. IMO it has way too much pork! It seems no matter what, congress can always make room for that.

    Cindy...Ga.

    October 3, 2008 at 1:48 pm |
  39. Michelle

    Lesson : the Treasury Sec'y Paulson was right.
    So I hope this is a lesson to CNN. Facts not
    pundits matter in complex issues such as these.
    Thanks goodness for Ali, Suzie and others who
    made it simple. Lou Dobbs went way overboard
    with efforts to try and derail this bill. Thank goodness
    average Americans called Congress and said get
    to work and pass the bill. and the listened to average
    Americans and not the chattering class the second
    time around. Please give us more content and less
    talk when it comes to the news and issues facing
    America.

    October 3, 2008 at 1:34 pm |
  40. Neil

    Aren't these sweeteners nothing more than bribes? Should those who change their vote because of them be prosecuted. Should those who tacked on these sweeteners be charged with bribery? Does it matter if bribes come from within or without?

    October 3, 2008 at 1:21 pm |