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Bailout bill stuffed with earmarks
San Francisco Chronicle


October 06, 2008

WASHINGTON -- 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: 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.

Several House Republicans railed 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.

The bill was approved easily, 74-25, winning support even from lawmakers who have crusaded against earmarks.

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.

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. The Senate passed them on Sept. 23 on a 92-3 vote 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."


-- Wooden arrows: This tax break, backed by Oregon's two senators, would benefit an Oregon manufacturer of wooden arrows for children by $2 million over 10 years.

-- Racetracks: Earmark would allow auto racetrack owners to depreciate their facilities over seven years, saving the industry $100 million over two years.

-- Rum: Offers rum producers in Puerto Rico and the Virgin Islands a rebate on excise taxes worth $192 million over two years.

-- Wool: Reduces tariffs for U.S. makers of wool fabric that use imported yarn, worth $148 million over five years. The measure was pushed by Reps. Louise Slaughter, D-N.Y., and Melissa Bean, D-Ill.

-- Exxon Valdez: Plaintiffs in the suit over the 1989 oil spill could spread their tax payments on punitive damages over three years, cutting their tax bill by $49 million. The measure was backed by Rep. Don Young, R-Alaska.

-- American Samoa: Allows certain corporations to reduce their tax liability on income earned in American Samoa, at a cost of $33 million over two years.

-- Hollywood: Extends a tax break for film and TV companies that keep their production in the United States, worth $478 million over 10 years.


E-mail Zachary Coile at zcoile(at)
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