Sunday, October 12, 2008

How Did The Financial Bailout Bill Pass? Votes Were Bought

Shocking? Maybe not. Maybe it was appropriate since the bill was all about money to begin with. You can read all about in Tax breaks big and small sweeten financial bailout. The basic idea is that some representatives who voted against the bill since they were taking heat from their constituents were convinced to vote for it the second time if tax breaks were attached to the bill. In many cases, tax breaks or deductions that were set to expire soon were extended. Texans can keep deducting their sales taxes on their federal tax returns (people from states with income taxes can deduct those taxes). Here are the first two paragraphs:

"Millions of taxpayers, thousands of businesses and groups as diverse as solar power developers and natural disaster victims will see tax relief with the House vote Friday to approve and send to the president a $700 billion financial rescue plan.

The tax relief package attached to the rescue bill promotes renewable energy development and extends dozens of tax breaks from the critical research and development tax credit to breaks for such narrowly focused groups as motor sports racetrack owners, film producers and bicycle commuters."

My students might recall something like this that I talk about on the first day of the semester. Congressmen in the early 1790s voted on the "Funding and Assumpton Act" based on how much money they would receive if that bill passed. The bill paid back all of the debts from the Revolutionary War at full value (they were not getting paid back before the Constitution was passed because under the Articles of Confederation all states had to agree to a tax increase-this did not happen much so taxes were never raised to pay back the money the government borrowed to finance the war). But under the Constitution if both the House and the Senate passed a tax increase and the president signed it, it became law.

The debts were securities or bonds. Some congressman owned them. I found how much about half the congressmen owned in these bonds from a book. The ones who voted yes on the bill had an average of about $6,000 while the ones who voted no had about $700. So it is possible that money influenced the vote.

1 comment:

Alexsandra said...

You would have readers if your writing skills were better. Thanks anyway for the info.