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JOEL STEIN

How desperate are they?

Stop the scary talk about needing a bailout. And stop giving stuff away.

October 03, 2008|JOEL STEIN

If I were in Congress, I'd hold out. Every representative who voted no on the bailout got something totally sweet in the bill that passed the Senate. Jim Ramstad (R-Minn.) changed his mind once he got the health insurance for mental illness he's been fighting for. The Senate is trying to bribe Gabrielle Giffords (D-Ariz.) with tax breaks for Arizona solar companies. Earl Blumenauer (D-Ore.), who rides a bicycle, is supposed to be tempted by a tax deduction for bike commuters, as Democrats Adam Schiff of Burbank and Brad Sherman of Sherman Oaks are by tax breaks for movie producers. If they all vote no again, the next version of the bill will include a federally funded movie about a schizophrenic guy who rides his solar-powered bike to work. Which will win 8,000 Oscars.

Apparently, the Senate doesn't do big picture. When the House rejected a $700-billion bailout that would have put our country even more precariously in debt, senators piled on $120 billion in tax cuts. I fear that the Senate's solution to the looming Social Security crisis will be to make more old people.

Sens. Barack Obama and John McCain both voted for the new bailout, despite having spent a tedius amount of time at the last debate on eliminating earmarks. This is why we usually nominate governors for president -- so they can't break their promises before election day.

There are some useless items tacked on to the Senate bailout bill, such as raising the FDIC insurance on bank accounts from $100,000 to $250,000. This will have the enormous effect of allowing car dealerships to have four bank accounts instead of 10. Seriously, if you're so dumb you're investing $250,000 in a bank account, you're money is going to wind up in a Nigerian con artist's hands no matter what our government does.

But the really dangerous add-on is the elimination, for yet another year, of the alternative minimum tax for the "middle class." This middle class is the top 24 million households, who earn more than $150,000 a year, and whom most call the "upper class." If left alone, the AMT would bring in $840 billion over the next 10 years. That's enough money to stabilize the dollar by reducing our national debt, boost the economy by investing in infrastructure, or to hand over to Treasury Secretary Henry Paulson to buy crappy mortgage-backed securities. Whatever's easier.

The AMT is a sort of loophole-free, very fair flat tax that was created in 1969 specifically to target 155 super-rich families, after an article came out explaining how they used accounting gimmicks to avoid paying nearly any income tax. But it was never indexed for inflation. So every year, more people get caught in it -- even honest, hardworking columnists who occasionally get paid to write sitcoms scripts. Of course, they don't really. There are still plenty of deductions and loopholes. My paycheck for this column, for instance, is paid to Steinacopia, an unprofitable corporation with only one employee who has about five business meals a week with his wife. Steinacopia really should fire that guy.

It's become clear that we're not so desperate that we should give so much away so quickly. On Sept. 18, Federal Reserve Chairman Ben Bernanke told House Speaker Nancy Pelosi that if a bill wasn't passed that week, "we may not have an economy on Monday." Not only did we have one, but in the coming days some smart, conservative investors (JPMorgan Chase, Citigroup, Warren Buffett) scooped up some troubled banks (Washington Mutual, Wachovia, Goldman Sachs) and the crappy mortgages they held, and the government hardly did anything. The only thing we have to fear is the government making us scared.

Any representative who voted against the world's largest economic bailout last week but votes for this bigger, uglier, more dangerous version has been bought. Whether you think this bailout is good or not, the people who changed their minds on such a monumental matter for such flimsy, unrelated reasons do not deserve to be trusted with your vote this November. They deserve to have their office called over and over in increasingly less believable accents. If you can do a crazy guy who rides a solar-powered bike, I'd go with that.

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jstein@latimescolumnists.com

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