Act III: The Final 2008 Financial Bailout Act (It is law!) >> In a 263-171 vote, the U.S. House of Representative today, October 3, 2008, approved a massive spending plan — voted down in an earlier form Monday (9.29.08) – that will supply hundreds of billions of dollars in a federal effort to ease the credit squeeze by buying up bad assets from financial companies.

After the initial $700 billion measure failed in a 205-228 House vote on Monday (9.29.08), the Senate wrapped in some tax cuts and business benefits that could bring the total cost of the legislation to about $850 billion. Some members of Congress referred to the additions as “sweeteners” intended to win over votes from those who initially opposed the spending plan.

NOW LETS SEE WHAT HAPPENS … WILL IT WORK?

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Financial Bailout: Act II >> The bailout bill approved late Wednesday, October 1, 2008, by the Senate (74-25) not only provides $700 billion for rescuing financial markets but extends billions more in tax breaks for renewable energy, businesses and middle class workers.

Much more pork: The roughly $150 billion cost of the tax package is partially offset by some revenue raising measures, including one that would change the tax treatment of deferred compensation paid through offshore tax haven accounts.

The sweeteners were added by the Senate to help it get through the House, though some members are already complaining about all the add-ons.

Here are some of the major provisions of the bill:

• The Federal Deposit Insurance Corp’s (FDIC) current insurance limit on bank deposits would rise to $250,000 per account from $100,000. The FDIC also would receive temporary unlimited borrowing authority from the Treasury under the bill.

• The Securities and Exchange Commission (SEC) would get the authority to suspend “mark-to-market” accounting standards, which require companies to value assets at their current market value instead of their projected value.

• Millions of middle-class taxpayers would get a one-year delay from higher tax rates under the Alternative Minimum Tax (AMT).

• The bill extends a provision allowing homeowners who do not itemize their taxes to take a deduction up to $1,000 for state and local property taxes.

• Extends a tax break for certain higher education expenses for taxpayers who do not itemize their deductions.

• Includes a provision that would require insurance plans that offer mental health benefits to offer those benefits at the same level as medical-surgical benefits.

• Provides tax exempt private activity bonds for Texas,Louisiana and Midwestern states hit by natural disasters.

• Other tax benefits to those areas to help develop low income housing and help businesses.

• Extends the research and development tax credit through 2009.

• Provides $18 billion in tax breaks for clean energy by continuing production tax credits for wind and refined coal and allowing facilities that generate electricity from waves and tides to qualify. Also extends tax breaks for solar energy.

• Provides new tax credits for carbon capture and sequestration demonstration projects for advanced coal electricity generation.

• Creates a new category of tax credit bonds to finance state and local government initiatives to cut greenhouse gas emissions.

• Creates new tax credit of up to $7,500 for plug-in electric drive vehicles.

• Extends tax credit for biodiesel production through 2009.

• Extends tax credits for homeowners who update with energy efficient products. Energy efficient biomass fuel stoves for the first time would qualify for a $300 credit.

• The bill includes extension of favorable business tax provisions, such as tax credits related to new markets and research and development as well as the tax treatment of costs for retail and restaurant improvements.

• Exemption for excise taxes of certain wooden arrows designed for use by children.

• Tax break for Puerto Rican and VirginIsland rum producers.

• More favorable tax treatment of income from litigation over the 1989 Exxon Valdez oil spill in Alaska. The latter provision is aimed squarely at Rep. Don Young, an Alaska Republican who voted against the bill on Monday.

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