by Mark Silva

Among the sweeteners that helped the $700-billion bailout of the financial industry go down in Washington this week was a $192-million break for rum..

But the distillers say we haven't got the break for Puerto Rican and Virgin Island rum quite right.

"Rum companies did not receive a tax break in the financial package,'' Lisa Hawkins, vice president for public affairs of the Distilled Spirits Council, advises us today.

"This has been widely misreported,'' she notes.

"The tax is paid by the distillers to the federal government,'' Hawkins explains. "The federal government returns the dollars to the ISLAND governments for infrastructure projects. It is long standing practice.''

"When taxwriters raised the FET for everyone in 1991 to $13.50 from $10.50 they failed to include this arrangement for the Iisland goverments,'' Hawkins explains. "Thus it became a technical correction that gets fixed in the tax extenders package every year since then.

"Each year I get a few questions about this because of the same confusion,'' she notes. "It is IN FACT a transfer of the TAXES PAID by the distillers, from the feds to the Island governments.''

It goes well, of course, with a $700-billion bailout.

Make mine a pina colada.

by Mark Silva and updated at 3 pm

With the House's second and successful vote on a $700-billion federal rescue of the nation's financial markets today, the economic challenge facing the next Congress and president is only starting to reveal its dimensions on Capitol Hill.

The House vote today -- 263-171 -- following a bipartisan 74-25 vote of the Senate earlier in the week, will set in motion an unprecedented federal action aimed at freeing a freezing credit market for businesses and consumers alike. It authorizes the Treasury to start buying as much as $700 billion in bad mortgage-related debts from banks and other financial institutions.

President Bush, who had demanded the bill, signed it at the White House within two hours of its final passage, stepping out to a sunsplashed Rose Garden to delcare that the bill is "essential to helping America's economy weather this financial crisis.''

It also offers taxpayers more than $100 billion in relief, exempting millions from the reach of the Alternative Minimum Tax and offering tax breaks for specific businesses as well. In addition, it raises the limit on federal insurance for depositors in banks and credit unions from $100,000 to $250,000.

It was these added incentives and an unrelenting sense of urgency that turned a reluctant House around - after defeating the first version of the bailout on Monday by a vote of 228-205. Some also cited the personal intervention of presidential candidate Barack Obama, who had personally called on fellow Democrats in the House, such as Rep. John Lewis of Georgia to support the measure.

Yet, on a day in which the federal government also has reported the largest monthly job loss in five years - in a year of steady job losses that has pushed the unemployment rate to 6.1 percent - lawmakers acknowledge that the federal bailout of the financial markets is not the end of the economic task they face.

Democratic congressional leaders say the next Congress and president will be compelled to follow up with not only tougher regulation of the banking and financial institutions that spawned a meltdown in mortgage lending next year, but also more "economic stimulus'' measures aimed at creating new jobs.

"This is only the first step,'' said Rep. Rahm Emanuel (D-Ill. chairman of the House Democratic Conference. "While we address the balance sheets of banks, the next steps must address the checkbooks of families, and the challenges they face.

"The middle class is suffering,'' Emanuel said during the House debate, promising "an agenda that puts the middle class at the heart of its economic strategy, unlike the last seven years.... We must strengthen the economy.''

em>by Mark Silva

The House has cleared the path for a $700 billion bailout of the nation's financial institutions today, warming up to a sweetened plan it rejected Monday.

With a 223-205 vote this morning, the House has blocked any amendments that might alter a plan that passed the Senate this week by 74-25. President Bush is posed to sign it.

The roll-call signals that the House stands ready, midday, to approve a bailout that it rejected by a 228-205 vote on Monday. Since then, more than $100 billion of tax relief for individuals and businesses has been added as an incentive.

The White House today encouraged the House to pass the plan - saying the president "strongly supports and urges swift House passage" - based on a rescue that Treasury Secretary Henry Paulson first outlined two weeks ago Saturday.

In debate on the House floor this morning, Rep. Steve Cohen (D-Tenn) cited "a great philosopher,'' Mick Jagger of the Rolling Stones, for inspiration:

"Sometimes you get what you want, and sometimes you get what you need,'' Cohen told the House. "This time, the American economy is going to get what it needs.''

(Photo of Mick Jagger and girlfriend L' Wren Scott at a screening at The Cinema Society in New York on Sept. 11, 2008 by Peter Kramer / AP)

by Frank James

What do rum, motorsport race tracks and wooden arrows used by kids all have in common? The financial markets bailout bill, that's what.

Taxpayers for Common Sense has compiled a handy list of what it called the top ten tax-related provisions in the financial-markets bailout bill passed yesterday by the Senate and they include some provisions that touch on, yes, rum, motorsport and wooden arrows and more.

As TCS says:

Not all the provisions are per se outrageous, but collectively are intended to help Congressional leadership get final passage of the 2008 Emergency Economic Stabilization Act.

Auto track owners are simply trying to get out of paying more taxes - which they'd have to do if they deducted less every year. These owners have gotten plenty of tax breaks over the years from states and localities eager to get speedways. The provision would be extend 2 years till the end of 2009 and would cost 100 million. The provision encompasses all facilities including grandstands, parking lots and concession stands.

by Mark Silva

So it is the Senate that goes first with the bailout -- some call it rescue -- of the nation's bad-mortgage-clogged banking institutions, with a vote tonight of 74-25.

The Senate's strong and bipartisan approval of a $700-billion rescue of the nation's struggling financial institutions, frosted with added new sweeteners for bank depositors and taxpayers, should help revive this historic attempt at righting the American economy in a resistant House.

The Senate vote tonight, with many Republicans voting for the plan and some Democrats against it, set the stage for a new run this week -- probably Friday -- at winning House approval of a federal intervention in the economy unseen since the Great Depression.

"It would be nice to say it's a cure,'' Sen. Jack Reed (D-R.I.) said, "but frankly it's a tourniquet.''

"This country faces many serious problems... We must act, but we must act in a way that improves the situation,'' said Sen. Bernie Sanders (I-Ver.) "We can do better than the legislation we are dealing with tonight.'' Others warned that in the long run the bill will "do more harm than good.''

Sanders added a certain personal dimension to the debate tonight, noting that Treasury Secretary Henry Paulson, promoting the $700-billion rescue, is a former CEO of Goldman Sachs, one of the investment houses responsible for Wall Street's ills.

Sen. Jeff Sessions, an Alabama Republican, said: "It is breathtaking that this Senate would authorize one person, with very little oversight, a Wall Street maven himself, to authorize... the largest expenditure in the history of the republic.''

Yet it was not only the advice of Paulson, but also the warnings of Federal Reserve Chairman Ben Bernanke, that started this train rolling in a private meeting with leaders two weeks ago tomorrow with a chilling explanation of the clogged arteries of the nation's credit markets and the heart attack that will follow if no intervention is taken.

"Who would ever have thought that the lowly mortgage, the staple of our financial system, would bring us to our knees,'' Sen. Chuck Schumer (D-N.Y.) said. "Chairman Bernanke held us spellbound the other night in the speaker's office when he (discussed the state of the economy). It was frightening.''

The new bill -- much bigger and more costly than the original for its addition of tax breaks -- has been crafted in a way to overcome objections in a resistant House.

What's new, since a sharply divided House voted 228-205 to scuttle the first plan on Monday:

-- A dramatically higher cap on insurance that the federal government provides for individual bank depositors - lifting Federal Deposit Insurance Corp. protection to $250,000 per account.

-- Also: Tax breaks for individuals and businesses alike, including relief for more than 20 million middle-income taxpayers subjected to an Alternative Minimum Tax that boosts their tax bills.

In addition, congressional leaders and the White House insist, the urgency of government action has been underscored by a roller-coast ride on the stock market, which followed the collapse of the federal bailout on Monday with its greatest single-day plunge in points ever and the largest percentage decline since the Black Monday of October 1987. The market rebounded the next day and held stable on Wednesday, as the Senate moved swiftly to revive apackage more palatable to the House.

"We're going to fix the problem this week,'' Senate Minority Leader Mitch McConnell (R-Ky.) said before the Senate vote.

Rep. Rahm Emanuel (D-Ill.), the House Democratic Caucus chairman and a key negotiator on the package, said he expected the tax cuts and bank protections added to the bill would probably help it pass the House: "It's a guess,'' he said. "I think we'll learn a lot on Friday."

by Mark Silva

"Understandably, people are frustrated and they're angry that Wall Street's mistakes have put their tax-dollars at risk,'' Sen. Barack Obama of Illinois said on the Senate floor late this afternoon, as the Senate prepared to vote tonight on a $700-billion federal bailout for banks aimed at averting economic crisis. "And they should be, I'm angry and frustrated too...

"It affects the financial well-being of every single American,'' the Democratic nominee for president said. "There will be time to punish those who set the fire... Right now, we want to put out that fire.''

"When the House of Representatives failed to act on Monday, we saw the largest single day decline of the stock market in two decades,'' he said. "While that decline was devastating, the credit crunch that caused will be even worse if we do not act... This is not just a Wall Street crisis. It's an American crisis. And it's the American economy that needs this rescue...

"Even with all these taxpayer protections, this plan is not perfect.''

"But it's clear that, from my perspective, this is what we need to do right now, to prevent the possibility of a crisis turning into a catastrophe...

"Even if we could get this place, we could still have enormous problems and probably will have enormous problems in the economy in the coming months,'' Obama said. "We are not going to dig ourselves out of that hole immediately. This is not the end. This is the beginning.''

Nor was this the end of his speech.

His 10-minute time-limit expired and he asked for "a couple more minutes.''

Laughter rang through the Democratic-run chamber about the request of the party's presidential nominee.

"I do not think this is going to be easy,'' Obama said. "Now more than ever, we are all in this together. That's part of what this crisis has taught us. At the end of the day, there is no separation between Wall Street and Main Street.... We can steer ourselves out of this crisis. We also have.''

Obama closed with Franklin Delano Roosevelt, speaking of that which is more important than currency - "the confidence of the people themselves... Let us united in banishing fear. Together we cannot fail. We cannot fail. Not tomorrow... Not next year.''

"Here in America,'' he said, "our destiny is not written for us. It's written by us.''

by Frank James

Here's the Economic Emergency Stabilization Act of 2008, the financial rescue proposal which a lot of people heretofore were calling the Wall Street bailout bill.

It's the bill the Senate is debating at this moment and which the chamber is due to vote on later tonight.

What started as Treasury Secretary Henry Paulson Jr.'s three-page proposal has now morphed into a 451-page monster with unrelated tax-extender or tax-increase and energy legislation.

by Frank James

The conventional wisdom in Washington is that one reason the Bush Administration's proposal to buy toxic assets from financial institutions failed in the House earlier this week is because of bad marketing. The administration allowed the plan to be described as a "bailout" and that word by itself outraged many Americans.

So the language has been changed. The proposal is now being described as an economic, financial or national "rescue plan."

Here's President Bush this afternoon:

I appreciate Senator Harry Reid's leadership in the United States Senate when it comes to the financial rescue plan. I also appreciate Mitch McConnell's leadership as well. The Senate will be voting on a very important measure tonight. It's -- the rescue plan bill has been improved by raising, by other things, raising, temporarily raising the cap of FDIC insurance.

Sen. Mitch McConnell, the Senate Minority Leader said:

I'm optimistic that we're going to have a significant bipartisan victory on the rescue plan here in the Senate tonight.

Speaking to the media outside the Senate chamber, Sen. Harry Reid, the Senate Majority Leader used the word bailout but tried to give it a different twist:

This is not a bailout for Wall Street. It's bailout for a country.

But later in the chamber, Reid was on message:

Senators Bennett, Corker and Gregg on the Republican side, as well as Senators Dodd, Baucus, Conrad, Durbin, Jack Reed and Schumer have done an exceptional bipartisan job to move the rescue legislation forward here in the Senate, and their work continues.

by Mark Silva

With added sweeteners for resistant Republicans and Democrats alike, Senate leaders are voicing confidence today that they can win the $700-billion bailout of the nation's financial markets stalled on Capitol Hill.

"We're going to fix the problem this week,'' Senate Minority Leader Mitch McConnell (R-Ky.) said this morning on the Senate floor.

With the Senate planning a vote this evening, and leaders predicting passage, the returning House will be asked to reconsider a plan that it rejected by 228-205 on Monday.

It's a plan-plus: Not only authority for the Treasury secretary to buy as much as $700 billion in bad mortgage-related assets from banks and other institutions with a goal of freeing a freezing credit market, but also a boost in the longstanding cap on federal insurance for individual bank accounts - raising the $100,000 cap on FDIC coverage in place for nearly three decades to $250,000. It also includes tax breaks: Freeing an estimated 20 million middle-class taxpayers from the reach of the potentially more costly Alternative Minimum Tax, and offering tax breaks for new business investment.

In other words, it's getting more costly the day - add another $100 billion or so over the next five years for various tax breaks, though the Bush administration insists that the government will get back most or all of the $700 billion that the Treasury invests in mortgage securities.

Senate leaders of both parties, who have been allied on the basic plan for some time and have struggled to bring House Republicans into the fold, predict that a strong bipartisan vote by the Senate will add impetus for the House to accept the plan on Thursday.

"I think the Senate thinks it has the votes and I think it probably will pass," House Majority Leader Steny Hoyer (D-Md.) said.

House Republican Whip Roy Blunt of Missouri agrees that prospects for the plan are improving, suggesting that the add-ons are making it more palatable to voters who have balked at the cost of it all.

by Mark Silva

The Senate will attempt to revive the president's $700 billion financial market bailout today, adding some sweeteners to try to make it more palatable to the House, which rejected it y 228-205 on Monday.

It's said the vote will be scheduled for 7:30 pm EDT, in respect for the Jewish holiday, Rosh Hashanah, which ends at sundown.

Probably a good idea not to be holding votes on this bill while the stock market is open, too - considering the 778-point slide in the Dow that followed the House meltdown.

But the bill probably faces easier sailing in the Senate, where leaders of both parties have been supporting the measure from the start.

And Senate leaders will add some sweeteners, such as a boost in the limit on federal insurance of bank accounts, raising FDIC coverage to $250,000 per account. Both of the presidential candidates, senators both, have endorsed this move.

The Senate may also add tax cuts to raise the stakes for House Republicans who opposed the bailout by a margin of two-to-one on Monday - an adjustment in the Alternative Minimum Tax that could spare 20 million middle-class taxpayers from the reach of a tax accounting that could add to their federal income tax bill.

In the meantime, the U.S. Chamber of Commerce has trotted out a few of its friends in support of the Bush administration's plan to purchase as much as $700 billion in bad mortgage debt from banks and other financial institutions.

The chamber letter to lawmakers below carries a list of signatures that reads like the federal lobbying registration:

Rep. Peter DeFazio introduces the "No Bailout Act" with other House members on September 30, 2008 on Capitol Hill. (Photo: TIM SLOAN/AFP/Getty Images)

by Frank James

You know the failed but still alive $700 billion bailout proposal has scrambled politics in the nation's capital when a fairly liberal member of Congress offers a solution to the financial-markets crisis that looks like something a Reagan Administration official created.

Actually that's exactly who created it. Rep. Peter DeFazio, an Oregon Democrat, took the ideas of William Isaac, who served as Federal Deposit Insurance Corp. chairman during the Reagan Administration and created legislation meant to help the capsizing financial markets right themselves.

DeFazio, a vociferous opponent of the Bush Administration's $700 billion Wall Street bailout, calls his legislation the "No BAILOUTS Act" and he talked about it today at a Capitol Hill press conference. He was joined by several other House Democrats:

And the underlying concern we all share is, we question the Paulson premise.

That is that giving him 700, borrowing or printing $700 billion, giving it to him and having him buy bad assets, on Wall Street,somehow will solve the interbank loan problem and even less likely the underlying problems of the economy.

So we're saying here, let's try a different approach....

by Mark Silva

Ron Paul and Dennis Kucinich are on top.

Let history record that, for one fleeting moment perhaps this week, the most anti-establishment candidates for either major parties' presidential nominations this year - two who stirred a lot of emotion but attracted few votes -- were riding the wave of the victorious majority of the House of Representatives.

They balked at the bailout.

Paul, the Republican congressman from Texas, delivered a scowling speech against the Bush administration's $700 billion bailout of the banks and other financial institutions stuck with bad mortgage debt on Monday - when it failed on the House floor by a vote of 229-205. And Kucinich, the Democratic congressman from Ohio, stood alongside him. Until now, opposition to the war in Iraq was largely what united these two occasional hotspurs of the political debate.

"The beneficiaries of the corrupt monetary system of the last three decades are now desperately looking for victims to stick with the bill after they have reaped decades of profit and privilege,'' Paul argued on the House floor..

Kucinich calls this "a teachable moment'' in our times.

"Slowly, like the Titanic turning around, sentiments on the Hill shifted, and we heard congressmen capitulating and changing their tune a little, desperately trying to find ways to salvage the bailout without completely enraging their constituencies," Paul wrote on his Web site before the vote on the bailout, which he feared would succeed. "Inevitably, it appears Congress will call their constituents' bluff and the bailout will pass, because that is the habit Wall Street and Washington have fallen into.''

Inevitably, perhaps, the Bush administration will win some variant on the bailout, sweetened perhaps with some lures to make it more palatable to just a few holdouts in both parties.

"Lipstick on a bailout,'' Paul calls it.

But then, Paul and Kucinich will return to the vocal minority.

But for now, they are on top, and Kucinich's own explanation of the bailout, how the Treasury's purchase of $700 billion in bad mortgage debt - with money that ultimately the Treasury will have to borrow from the credit markets - is worth the reading, no matter what anyone thinks of the deal:

by Frank James

A day after the House voted against the Bush Administration's $700 billion Wall Street bailout, the expectation that the legislation will will be brought up again led to so much incoming traffic from angry constituents that it slowed the House website to a crawl when it was accessible at all.

Many House members weren't even around since the chamber was off for the Jewish holiday Rosh Hashanah. But that didn't seem to matter. A congressional aide told me Capitol Hill techies were working to fix the problem and the site does seem better than it was a few hours ago when it was essentially frozen just like those credit markets we keep hearing about.

By Andrew Zajac

One of the weird little ironies in the massive failure of political leadership in Monday's defeat of the Wall Street bailout package involves the role of Republican Minority Leader John Boehner.

After striking a deal with Democrats, Boehner was unable to deliver his caucus. Somewhere, Vernal Riffe and Corwin Nixon are groaning and rolling their eyes.

Boehner has spent the last 17 years in the House, but he cut his political teeth in the Ohio House of Representatives under legendary Democratic Speaker Riffe and Minority Leader Nixon, a canny survivor of numerous plots against him by his own colleagues.

If Boehner learned nothing else from them, he should have learned how to count votes.