Understanding the New/Old Package

Now, the Senate.

The latest rescue package will be debated today and voted on in the Senate tonight.   Key tax concessions and extenders aimed at the consumer make this legislation more likely to pass.  The Senate has been working to get these tax break extenders enacted and the upper chamber sees the perfect opportunity to get take care of that by attaching it to this bill.   The entire tax extender that passed the Senate is included in this new bill.

There is no financial-sounding title to the Senate bill like there was on the the "Emergency Economic Stimulus Act" moniker on the House bill (though the current name could change to that once the House provisions get added in).   For complex procedural reasons, the Senate bill is being attached to a stalled piece of alternative-energy legislation.   There will also be a number of other pieces of legislation thrown into the pot.   Senators therefore will be voting on the rescue plan in addition to tax credits for geothermal energy and wind power, mental health insurance issues, alternative minimum tax changes and the all-important tax cut extenders.   While these consumer-sensitive changes to the financial portion of the legislation may help get it passed, the other bills attached to this may still complicate matters.

Confused?   Me too.   I should've paid more attention in 9th grade Civics.

Here's what we know about what the Senate will vote on:

What remains from the House bill:

• The original $700 billion dollar Treasury fund to buy bad assets from banks and other institutions remains.   The Senate bill is similar to the failed House measure in that the money is doled out first with $250 billion, and then more as needed from there.   Congressional approval is needed for the back-half of the money
• The Treasury would buy assets both through auctions and direct purchases.   The general fund is at the heart of the bill and does not change
• Certain executive pay restrictions

What is being added:

• A boost in the FDIC deposit insurance cap to $250,000 from $100,000
• A one-year "patch" to the alternative minimum tax
• Optional insurance for mortgage-backed securities, with financial institutions paying premiums
• Tax breaks for those impacted by natural disasters
• A mental health parity provision providing insurance for mental illness
• A two-year extension of the research-and-development tax credit

Odds are growing this package makes it through.  As Dan Ripp of policy research firm Bradley Woods puts it, the combination of tax extenders and financial bailout provisions could attract House Republicans who originally voted against the financial rescue plan on Monday.   But it may also irritate a group known as the "Blue Dog Democrats" who will be upset by the tax breaks.    The Blue Dogs though, while vocal, likely don't have enough votes on their own to stop passage if more Republicans get on board.  24 of the 49 "Blue Dogs" voted against the House bill.   Remember that the House and Senate have been sparring over these tax break extensions for more than a year.

If you are counting, with the energy, tax, and other measures thrown in, the Senate bill is now 406 pages long.

The House is also going back to work on its own measure.    If this opus passes the Senate, it will be a big boost to those in the House who voted for the original bill.   It will also provide an "out" for those who voted against it.   They would be able to quietly change their votes, likely using the tax-break provisions or Senate pressure as their rationale.

Look for this to pass.