Various outlets, from the Times to Yglesias, have referred to the rescue bill passing with "sweeteners" attached, but that's not exactly right -- in fact, it looks like the Times changed their headline and took the word out of their original article, you can see the original hed here. The only addition to the actual bailout package that could be described as a sweetener -- a provision attached specifically to encourage its passage -- was the one which raised the FDIC insurance level from $100,000 to $250,000, and is generally supported across the board.
What people refer to as "politically enticing provisions" are the $150 billion in tax breaks. But this is a tricky concept: Those breaks were going to be voted on anyway. The only reason the bailout bill includes them is a little parliamentary chicanery: In order for the Senate to vote on any appropriations bill before the House does, such as the bailout bill, it has to be attached to something that already came out of the House, in this case, the tax extenders.
The breaks in the extenders include a provision to exempt people from the Alternative Minimum Tax (AMT), introduced in 1970 to prevent wealthy people from using tax loopholes to escape the IRS. But the minimum wasn't indexed to inflation, so more and more non-wealthy people have gotten hit by the tax, leading Congress to regularly exempt more and more people from it. (Typical of Congress, they haven't eliminated the AMT and focused on closing loopholes, or simply linked the AMT to the rate of inflation). A Senate aide who worked on the legislation told me last night that the tax provisions in the extenders had been in their final form for some time and had not been changed since the bailout bill was attached.
Now, the tax cuts will no doubt make it easier for the House GOP to vote for the deal, and harder for some Dems, especially Blue Dogs, since the tax extenders are only about half paid for and don't meet Pay-Go rules. But they would have come up for a vote in the House anyway. Even though many in the house are disappointed they couldn't vote on the bills separately, some, including Majority Leader Steny Hoyer, are going to vote yes simply because the rescue takes precedence. Despite the change in voting dynamics the tax extenders provide, they aren't likely to be the reason the bill passes the House -- between the FDIC provision, the increasing signs of a credit crunch, the loss of retirement funds and pension equity in Monday's stock market decline, the twelve members of Congress who were needed to vote yes Monday would probably have been found by Friday, when the House is expected to take up the matter.
--Tim Fernholz
