A little test for all of us

[kcjenkins]

The $700 billion "bailout" for Wall Street -- officially known as the Emergency Economic Stabilization Act of 2008 -- contains multiple "earmarks", or special funding for various pet projects, that add as much as $100 billion more to the costs.

The first proposal by the Treasury Dept. was 3 pages. The failed House version was 110 pages. The final bill that was passed was over 450 pages.

Some of the earmarks tucked into the bill's pages by both Democrats and Republicans include:

$2 million tax benefit for manufacturers of toy wooden arrows for children

$100 million tax break to benefit automotive racetracks

$192 million in rebates for the Puerto Rican and Virgin Islands rum industry

$224 million for temporary emergency penthouses for financial company executives

$148 million in tax relief for U.S. wool fabric producers who use imported yarn

$49 million tax benefit for fishermen and other plaintiffs who sued over the 1989 tanker Exxon Valdez spill

$48 million a year for film and TV producers who produce their work in the United States

$33 million tax credit for select corporations earning income from American Samoa

The punch line? All of those provisions are true -- except for one. Can you figure out which one is fake?

(Source for the true earmarks: Taxpayers for Common Sense.

The fake one: the $224 million for FEMA temporary emergency penthouses for financial company executives.)

[michaelmars]

you shouldn't have given away the answer, btw wasn't the packaged upped to 800 bil to cover the earmarks!

[taxxcpa]

Here is a well-written discussion of the Bailout by Glenn Beck:

Glenn Beck: What happened?

> October 8, 2008 - 1:47 ET

>

> Glenn's letter to his sister explaining how we got into this

economic crisis...

> Yes, another email letter from your crazy brother. You raised a lot

of questions in your last email and I am going to try to answer all

of them.

>

> I think all of your questions fall into three areas: (1) how did we

get here; (2) what's coming; and (3) what can I do to prepare myself

and my family.

>

> Consider this email as my answer to your first question, "how did

we get here?". I'll be sending you 2 more emails answering your other

two questions. Since there's a lot of misinformation out there I will

document each of the facts in my emails so you know where I pulled

the information from and where you can go to read and learn more.

>

> What you shouldn't do is panic. We'll get through this--don't pull

all of your money out of the bank but have enough cash on-hand to

meet any possible emergencies.

>

> First, you've got to get the stock market's ups-and-downs out of

your mind. The recent drops and upticks are short-term. Our economic

problems are much bigger and deeper. Too many people believe that if

the stock market goes up our problems are behind us and that's simply

not true.

>

> Last week the market had big drops and big upswings. In the end,

the market ended down more than 800 points and lots of 'experts' were

shouting it was a time to buy. I don't see it that way.

>

> Did you know that just two days after the stock market crashed in

October 1929 the market actually gained ground the next two days? The

New York Times reported that "the market quickly regained its poise

and stability...." Today, Wall Street 'pros' are telling us it's a

good time to invest because Warren Buffet is investing. A lot of

people were probably using the same argument when the Rockefeller

family was buying stocks right after the 1929 crash, what they didn't

know was that it would take Wall Street ten more years to see those

prices again.

>

> Our current economic crisis was caused by politicians, both

Democrats and Republicans, who perverted the American Dream by

treating home ownership as an undeniable right rather than what it

really is, a privilege. President Bush aggressively promoted the

benefits of home ownership through various policy positions,

including a reckless zero down-payment initiative for some homebuyers

and praised Fannie Mae and Freddie Mac even after concerns about

their accounting standards began to surface.

>

> Home ownership has always been part of the American Dream. It

allows individuals and families to build wealth by having them pay

themselves instead of a landlord or rental company and vests people

in their communities by grounding them in local schools, stores and

government.

>

> The concept that owning a home was a privilege and not a right

began to change in 1992 following a flawed Boston Federal Reserve

Board study which allegedly found subtle discrimination in loan and

mortgage lending by banks and mortgage lenders.

>

> Politicians didn't care that the study was full of errors. The

study found discrimination took place when five minority applicants

were rejected for special low-income loans even though the applicants

were rejected because they made too much money to qualify for a low-

income loan, not because of their race. The report also classified

as 'rejected' the applications of eight minority borrowers even

though these borrowers voluntarily withdrew their mortgage

applications. The study's sloppiness also went the other way.

>

> The study reported that a white applicant was approved for a

$3,115,000 loan in order to purchase a home valued at $445,000. It

was later demonstrated that the actual loan was approved for

$311,500, far less than $3 million reported and more importantly,

less than the home's purchase price. When these and other errors were

corrected no evidence of discrimination existed.

>

> But politicians didn't care. They used this report as the basis to

fix a problem which didn't exist. Leading the charge for change was

President Clinton who immediately set-out to rework the Community

Reinvestment Act to give federal officials the power to pressure

banks to make loans they otherwise considered too risky or

uneconomical.

>

> Traditional lending requirements were labeled 'outdated' and

discriminatory. What 'traditional lending requirements' were viewed

as 'outdated' and 'discriminatory'? (1) banks were told that a "lack

of credit history should not be seen as a negative factor" and

that "past credit problems"

> should be viewed and considered in light of any "extenuating

circumstances" so loans could be extended when they otherwise would

have been denied; (2) banks were encouraged to let borrowers without

enough money for a down-payment make-up any deficiency with "gifts,

grants, or loans from relatives, nonprofit organizations, or

municipal agencies" even though banks considered this risky as the

home buyer would have little or no equity in the house; (3) banks

were also instructed that borrowers who received child support,

welfare payments or unemployment benefits could count that

as 'income' for borrowing purposes.

>

> Call me crazy but if you need to count child support money that's

intended for your child, or are in such bad economic shape that

you're relying on welfare payments to make ends meet or are

unemployed, maybe, just maybe, you shouldn't be buying a house. Too

bad our politicians and the 'best and brightest' on Wall Street

couldn't figure that out!

>

> Community groups like ACORN, threatened to cry racism if banks

didn't increase their loans to subprime borrowers. Banks typically

avoided subprime loans as they carried a greater risk of default, but

with law on its side, ACORN and other groups intimidated lending

institutions into making such loans.

>

> Banks soon learned, however, that making subprime loans actually

could increase their profits without increasing their risk. Once the

banks extended a loan to a subprime borrower that loan could then be

sold by the bank to Fannie Mae or Freddie Mac, two government

sponsored entities charged with making home ownership affordable to

all Americans.

>

> Banks, Wall Street, and mortgage lenders were soon eager to extend

mortgages to subprime borrowers because they could make lots of money

without carrying any risk. Fannie and Freddie carried all the risk

once the original lending agency sold the loan to them. And once

Fannie and Freddie bought the loan this freed up the banks to make

even more subprime loans.

>

> So everyone was a winner. The subprime borrower got the money to

buy a house. The banks generated mortgages and made a nice profit and

Fannie and Freddie executives made tens-of-millions of dollars in

salaries and bonuses by hitting their annual goals.

>

> The problem was that in order to keep all of this going lending

standards were continually lowered to help the next level of subprime

borrowers qualify for mortgages and no one had an incentive to make

sure that the new subprime borrowers would actually be capable of

making regular mortgage payments. The banks which extended the loans

really didn't care because they were just going to sell the loan off

to Fannie or Freddie. Fannie and Freddie weren't too concerned

because it wasn't their money-they knew that they were insured by

the 'full faith and credit' of the federal government (that's

government lingo for "you and me").

>

> So when federal regulators began to warn the executives at Fannie

and Freddie about the increasing risks of non-payment by subprime

borrowers the companies did nothing and when the regulators took

their concerns to congress their warnings were met with scorn and

contempt. The politicians who received the most political

contributions from Fannie and Freddie, by pure coincidence, just

happened to be their biggest defenders: Chris Dodd (D-$133,900), John

Kerry (D-$111,000) and Barack Obama (D-$105,189).

>

> Representative Barney Frank, who has been a fierce defender of

Fannie and Freddie, actually said, while arguing against more

regulation, "I want to roll the dice a little bit more in this

situation towards subsidized housing.... " It's nice to know that he

doesn't mind gambling with our money. Senator Chris Dodd, in praising

Fannie and Freddie said, "I, just briefly will say, Mr. Chairman,

obviously, like most of us here, this is one of the great success

stories of all time.

> "While Senator Charles Schumer said, "And my worry is that we're

using the recent safety and soundness concerns, particularly with

Freddie, and with a poor regulator, as a straw man to curtail Fannie

and Freddie's mission."

>

> Barack Obama has received more money from Fannie and Freddie than

any other senator, with the exception of Senator Dodd, in the last

four years. Before entering the senate, Obama filed a class-action

lawsuit against Citibank, alleging that the bank was red-lining, or

not doing enough lending in certain areas. That lawsuit was

eventually settled. Arguably, Barack Obama helped cause the problem

he now wants to fix.

>

> The Federal Reserve Board was doing its part by throwing huge piles

of cash at would-be home buyers by keeping interest rates too low.

With low interest rates speculators began to look at houses as

business opportunities, while others began to look at their homes as

a giant piggy bank rather than a place where you actually lived and

raised a family. Alan Greenspan encouraged this type of behavior and

proudly said, "American consumers might benefit if lenders provided

greater mortgage product alternatives to the traditional fixed-rate

mortgages..." President Bush, responding to September 11th unwisely

encouraged us to "go shopping" rather than hunker down financially

and contribute to the War on Terror in other ways (can you say home

equity loans?).

>

> The SEC also shares in the blame. It failed to do its job (failed

to adequately regulate mortgage brokers, the credit rating companies,

and naked short-sellers), acted only after the markets froze-up

(finally addressed mark-to-market rules) and refused to examine how

the credit-default-swap market could grow from $919 billion in 2001

to over $54 trillion by 2008 (which allowed companies to make wild

financial bets with the false confidence that 'insurance' would be

there if the deal went south).

>

> So what happened? Home-ownership rates which had been relatively

constant for 25 years began a 10 year upward climb beginning in 1995,

around the same time that government began its push and pressure for

banks to make more subprime loans. The politicians, banks, lenders

and Wall Streeters were thrilled because they were all making gobs of

money.

>

> Today we are all paying the price for the decisions made long ago.

I have spoken to people involved at the highest levels and they now

are all saying the same thing, "it is worse than anyone knows"

and "worse than I even thought." Political and business leaders who I

respect have told me that the economy is on the edge of an abyss.

>

> The bailout is an outrage and is designed only to buy time for the

politicians. It will delay the real hard times from hitting until

after the November elections. Not one politician has said that this

bailout legislation will put us on a better financial footing or that

our economic problems will be put behind us. In fact, we'll be worse

off because our politicians, even in this crisis, can't stop

themselves from spending. This bill includes an extension of the rum

tax benefits for Puerto Rico and the US Virgin Islands ($192

million), tax benefits for companies which manufacture wooden arrows

for kids ($6 million), car racing tracks ($128 million), a provision

which forces insurance companies to treat mental health problems like

physical problems ($3.8 billion) and many, many more.

>

> International markets don't offer any better alternative. Germany,

England, the Netherlands, and Russia have all come out with their own

government backed bailout plans. There are now calls for more

international regulation (presumably led by the United Nations) and

China has taken this opportunity to call for "a diversified currency

and financial system and fair and just financial order that is not

dependent on the United States." Meanwhile, there is increasing

international indications that the dollar will lose its place as the

reserve currency of the world.

>

> The politicians from both political parties continue to lie to us.

They promise us better healthcare and more government programs. The

only thing either party will be able to deliver is higher, much

higher, taxes as the debt swells and government revenues fall. The

same politicians remain silent, while capitalism, which brought us

the highest standard of living in the world, is increasingly attacked

and discredited by its enemies.

>

> But it's not capitalism which has been discredited by our current

crisis, it's greed that has been shown to be at the root of our

present economic uncertainty, and greed is unfortunately a universal

human trait and has demonstrated its reach in socialism, fascism,

communism and capitalism. The greed of Wall Street is nothing

compared to the greed of our politicians who have continued to expand

their power and influence at the expense of their country.

>

> Our children and grandchildren will ultimately pay the price for

their failure to act prudently and in the best interest of our

country because they will be the ones saddled with mountains of debt

and diminished standard of living.

>

> I hope that this summary gives you a better idea of how the people

who caused this fire are the same ones who are now telling us that

they know best how to put it out and a reason not to believe their

current promises.

>

> We have faced tough times before. We fought the Nazis in World War

II, defeated communism in the Cold War and Americans fought each

other to keep our country together in our own Civil War. These tough

times require us to educate ourselves and help others understand what

has brought us to this point and the grave consequences of what will

happen if we let this continue-that is our fight.

>

> In my next email letter I will answer the other question you

asked, "what's coming?"

>

, I know you will always consider me your crazy brother but

please pass this message on to all of your friends. There are too

many rumors circulating and I want to put the facts out there. This

isn't about slamming the Democrats or Republicans--this is about

getting the truth out to as many people as possible. The more people

we can wake-up the more people we will have restoring the hope,

promise and opportunity of our great country. Please pass this on.

>

> Glenn

>

>

[Catherine]

Here is a well-written discussion of the Bailout by Glenn Beck:

Aha -- another Beck reader! I certainly don't agree with him all the time (maybe not even most of the time), but his research is impeccable. I have yet to find a _factual_ error in anything of his I've checked.

Catherine