Billions in earmarks in Senate's bailout bill

Protesters perform a skit mocking the economic bailout plan in front of the Capitol building in Washington October 2, 2008. The House is expected to vote Friday on the $700 billion financial rescue plan which was passed by the Senate last night. REUTERS/Kevin Lamarque (UNITED STATES) less Protesters perform a skit mocking the economic bailout plan in front of the Capitol building in Washington October 2, 2008. The House is expected to vote Friday on the $700 billion financial rescue plan which ... more Photo: Kevin Lamarque, Reuters Photo: Kevin Lamarque, Reuters Image 1 of / 3 Caption Close Billions in earmarks in Senate's bailout bill 1 / 3 Back to Gallery

While crafting a bill intended to rescue the U.S. economy this week, lawmakers couldn't stop themselves from adding billions of dollars in tax breaks that have little to do with restoring confidence in financial markets.

Senators quietly tucked a number of earmarks into the tax package of the 451-page bill that was passed Wednesday night and is expected to be put to a vote in the House today: a $2 million tax benefit for makers of wooden arrows for children; a $100 million tax break to benefit auto racetrack owners; $192 million in rebates on excise taxes for the Puerto Rican and Virgin Islands rum industry; $148 million in tax relief for U.S. wool fabric producers; and a $49 million tax benefit for fishermen and other plaintiffs who sued over the 1989 tanker Exxon Valdez spill.

Many of the tax breaks were put in place years ago and were set to expire. But their inclusion is complicating efforts in the House to pass an economic rescue plan; an earlier attempt failed Monday. Several House Republicans railed on Thursday against the pork-packed bailout bill.

"One thing we didn't appreciate in the Senate's action was that they decided that this bill should become Christmas in October," said Steven LaTourette, R-Ohio. "We just don't think (the earmarks) should be in this piece of legislation."

The tax earmarks were scarcely noticed during the Senate debate over a bill that featured a $700 billion bailout package and a $112 billion tax package, including the renewal of popular tax breaks for businesses and renewable energy projects and a one-year effort to shield at least 20 million Americans from paying the alternative minimum tax.

Broad support

The bill was approved easily, 74-25, winning support even from lawmakers who have crusaded against earmarks - including Arizona Sen. John McCain, the Republican Party's presidential nominee, who warned last week that he might oppose a bailout bill if it included more pork-barrel spending.

"It is completely unacceptable for any kind of earmarks to be included in this bill," he said in a speech in Freeland, Mich. "It would be outrageous for legislators and lobbyists to pack this rescue plan with taxpayer money for favored companies. This simply cannot happen."

On MSNBC's "Morning Joe" program Thursday, McCain was pressed on why he voted for a plan that included earmarks that he strongly opposed. He said he had to support the bill because the country is "on the brink of economic disaster."

"There were plenty of other bills that I fought against, voted against" because of pork, McCain said.

The tax earmarks were championed by both sides of the aisle. Western lawmakers, especially Sens. Ron Wyden, D-Ore., and Larry Craig, R-Idaho, backed an expansion of a program that helps pay for rural schools. Lawmakers from states with no income tax backed an extension of a program that allows residents in states including Texas, Nevada, Florida, Washington and Wyoming to deduct the sales tax they pay over a year from their federal taxes, a provision that costs the Treasury $3.3 billion over two years.

Benefit for film producers

Even Hollywood got something out of the Senate bill: renewal of a tax incentive worth nearly $48 million a year for film and TV producers who produce their work in the United States.

The earmarks are not exactly new. They were passed by the Senate on Sept. 23 on a 92-3 vote (McCain and his Democratic rival, Barack Obama, were absent) for a tax package costing more than $100 billion. House Democratic leaders opposed the Senate's tax plan because it wasn't fully paid for and will add to the federal deficit.

Steve Ellis, vice president of Taxpayers for Common Sense, the congressional watchdog group that tracked the earmarks in the bill, said Senate leaders had two main objectives in strapping the tax package to the financial bailout plan.

"One is they're hoping this will turn a few votes, that people who support some of these provisions will forget about the $700 billion and concerns they may have on that, and say, 'If you give me a few million in tax breaks for my constituents, I'll go along,' " Ellis said. "The second reason is that this is your standard, run-of-the-mill, end-of-year politics. You take a piece of must-pass legislation, you cram whatever you want in there and you dare the House to oppose it. It's really a pretty cynical maneuver."

The tactic might have helped pass the plan in the Senate, but it's making life tougher for House leaders. The House narrowly defeated the bailout plan 228-205 Monday, and lawmakers now must flip at least 12 votes to change the outcome.

House Blue Dogs are complaining about the costs of the tax package. Republicans are unhappy at what they see as an attempt to sneak pork into the bill. Rep. David Hobson, R-Ohio, voted for the bill but said he's now undecided. "I hope other people who voted yes may be reconsidering where they are when they get the outrage of the pork barrel projects," he said.

Measured optimism

But leaders of both parties said Thursday they are cautiously optimistic the measure will pass. Several lawmakers indicated they were ready to switch from "no" to "yes" votes, including Republican Reps. Ileana Ros-Lehtinen of Florida and Zach Wamp of Tennessee. Rep. Roy Blunt, R-Mo., the GOP's top vote-counter, predicted the measure would pass.

House Speaker Nancy Pelosi said she won't put the financial rescue bill on the floor unless it's clear it will pass, hoping to avoid a repeat of Monday's embarrassment, when the bill failed a day after party leaders had announced a deal.

But she added, "I'm optimistic that we will take a bill to the floor."