Bailout Bill Caters to Special Interests

Watermelon growers. Filmmakers. Owners of electric cars. Commuters in northern New Jersey. Those are among the people who would benefit from the very fine print of a Senate measure to boost the languishing U.S. economy.

The bill, on which a vote is expected next week, would pour about $70 billion into the economy next year, mostly for extended unemployment benefits, health insurance subsidies and tax breaks for individuals and businesses. But it also includes a panoply of provisions less obviously connected to stimulating the economy--and more clearly designed to win support from specific senators.

In a last-minute concession to Sen. Robert Torricelli (D-N.J.), the bill includes bonding authority for Amtrak to develop high-speed railroads and for a new New York-New Jersey tunnel. More than $5 billion in agriculture subsidies were grafted on to help shore up support of farm-state members. A tax credit expanding Internet access in rural areas was folded in at the behest of Sen. John D. “Jay” Rockefeller IV (D-W.Va.).

The Senate Finance Committee approved the bill Thursday night on a party-line vote, but only after Republicans spent hours slamming it as a hodgepodge of special-interest favors that will do little to strengthen the economy. “This is a collage of political giveaways,” said Sen. Phil Gramm (R-Texas).

Sound familiar? That’s because Democrats mounted a similar critique of the bill approved by the Republican-controlled House two weeks ago. Democrats argued that the House’s $100-billion tax cut bill would primarily benefit some of the biggest corporations in America, including General Electric and IBM. Rep. Martin Frost (D-Texas) called it a “grab bag of special-interest goodies.”

The mudslinging on both sides illustrates a new line of argument that crops up in debates all over Capitol Hill these days: The best way to attack your opponents is to accuse them of trying to capitalize on the post-Sept. 11 sense of crisis to advance a parochial political agenda.

Sometimes the critique boomerangs. Rep. J.C. Watts Jr. of Oklahoma, a member of the House Republican leadership, issued a statement Thursday attacking the Senate Democrats’ bill, saying, “The Senate’s economic proposal focuses more on the excise tax for rum and other special-interest breaks than creating jobs.” He was referring to a Senate provision that would extend for one year an existing provision affecting rum imports. The problem with his argument, however, is that the same provision is in the House Republican bill--which Watts supported.

That’s just one of many provisions in both the House Republican and Senate Democratic bills that have little connection to economic stimulus; instead, they extend a slew of tax breaks, routinely approved by Congress with little notice, that are about to expire. (One, for instance, gives a tax credit to people who buy electric cars.)

At the White House, Press Secretary Ari Fleischer said the Senate bill contained “too much spending and not enough stimulus.” He lambasted the $220 million in the bill for bison meat, eggplant, cauliflower and pumpkin growers--in essence, a government subsidy for commodities that have “experienced low prices during the 2000 or 2001 crop years.” Thirty-four commodities would qualify.

“I don’t see how spending money on watermelon and bison meat will help the economy to grow,” said Senate Minority Leader Trent Lott (R-Miss.).

But Senate Finance Committee Chairman Max Baucus (D-Mont.) said that help for the ailing agricultural sector is an appropriate element of an economic recovery plan.

“When our national economy declines, rural areas are often among the areas that are hit the hardest and that recover slowest,” said Baucus.

Another industry that could benefit from the Senate bill is the motion picture industry. Like the House bill, the Senate bill allows businesses to more quickly write off their investments in assets whose value depreciates over a number of years. But unlike the House legislation, the Senate bill includes a provision specifying that films are a depreciable asset qualifying for the tax break.

The Senate bill also includes an array of benefits for New Yorkers, though even Republicans were loath to call them “special interests.” But the city devastated by the Sept. 11 terrorist attack would receive $5.3 billion in tax benefits over 10 years--including a $4,800-per-worker tax credit for wages paid by any employer whose business was south of Canal Street in Manhattan.

New York has no representative on the finance committee, but Torricelli took the lead in pushing for such relief. He also held out for tax breaks to improve the tunnel and other transportation options between New York and New Jersey, as well as for Amtrak to develop more and better high-speed rail lines.

“I make no apology,” Torricelli said. “We learned the fragility of our transportation system Sept. 11.”