Bailout Bill Passes in the Senate

The Senate passed the bailout bill 74-25. Barack Obama and John McCain voted the Senate bailout package. In the Senate bill, the Federal Deposit Insurance Corporation has been given the authority to raise deposit insurance from $100,000 to $250,000. The FDIC insures banks.Homeowner's insurance or mortgages will not be covered. The problem is this doesn't discourage banks from driving up more debt. What this allows is wealthy people to put $250,000 into different banks. Each account is insured for $250,000.

The Senate bill was filled with amendments.

The approximately $150 billion in new tax breaks, which offer incentives for the use of renewable energy and relieve 24 million households from an estimated $65 billion alternative-minimum tax scheduled to take effect this year, would be offset by only about $40 billion in spending cuts or tax increases elsewhere.

A freeze was placed on the Alternative Minimum Tax. I wonder if the bailout package addresses middle class people needlessly being taxed under AMT. It is time for the ATM to be indexed to inflation.

Side note:

The presence in the Senate of both presidential candidates in the final weeks of the campaign gave weight to the moment. The political tension was clear as Senator Barack Obama walked to the Republican side of the aisle to greet John McCain, who offered a chilly look and a brief return handshake.

McCain really is behaving like a child.

Shorter Rudy: Tax Cuts Pay For Tax Cuts

Rudy Giuliani made the bizarre statement that lost revenue from cutting or eliminating the alternative minimum tax could be paid for by making the Bush tax cuts permanent.

"Over time we can figure out how to eliminate it. ... If we were going to eliminate it, though, we'd have to balance it with additional tax cuts," Giuliani said, leaving confused expressions on his audience. "That might be by making the Bush tax cuts permanent."

The AMT was created to eliminate loopholes in the tax code. Over 50 percent of people taxed under AMT make over $200,000-a-year. A way to make AMT less regressive is to adjust it to inflation. Getting rid of the tax during a war and budget deficit is stupidity. AMT brings in a $100 trillion-a-year. How does Giuliani plan to pay for the ten new combat brigades he wants? He is in for a shock if he thinks supply side economics really works.

Kevin Drum wants people to take Rudy to task for his statements.

Please. Just for once, can we hold this guy responsible for what he says? Sure, he misspoke, but he misspoke because he doesn't have a clue what he's talking about and blurted out the first thing that came to mind: namely that reducing taxes is the answer to every question. Nobody with even the vaguest idea of what it meant to eliminate the AMT would say that it had to be balanced by reducing other taxes.

Remember when George Bush wasn't able to name the president of Pakistan back in the 2000 campaign? Everyone laughed it off. But this isn't a game of gotcha. Nobody forces Rudy to say this stuff. He just flatly doesn't know what he's talking about. He's a buffoon. It's time for the press corps to take notice and quit giving him a pass on this stuff.

Campaign reporters don't write about economics. Mainly, because they don't have the background or training in the field. Editors need to stress economics more in presidential campaign coverage. One of these candidates will win the Oval Office and run policy for the world's biggest economic power.

Rudy is running for President of the United States, not Student Council. He is an educated man. He should have a basic understanding of economics. The fact that he knows not what he says shows lazy critical-thinking-skills. His statement that tax cuts pay for other tax cuts is the equivalent of a person getting a lower paying job to pay his bills.