Bloggeron

On Wednesday evening, October 1st, the US Senate passed the revised bailout bill. The bill had many earmarks added to it. For those who are not familiar with the term earmarks - an earmark is a totally unrelated amendment added to a bill usually added surreptitiously. Despite opposition by the public, earmarks are a long standing tradition in the US House of Representatives and the US Senate. An earmark enables a legislator to insert a piece of legislation that could never stand scrutiny in a public debate. Earmarks are often added to fulfill promises legislators make to various lobbyists which would likely be criticized by the vast majority of the public.

The new bailout bill is 451 pages long and contains many earmarks ranging from the amusing to the utterly ridiculous. Here are some of the more egregious earmarks;

Film and Television Productions (Sec. 502)

Wooden Arrows designed for use by children (Sec. 503)

6 page package of earmarks for litigants in the 1989 Exxon Valdez incident, Alaska (Sec. 504)

Virgin Island and Puerto Rican Rum (Section 308)

American Samoa (Sec. 309)

Mine Rescue Teams (Sec. 310)

Domestic Production Activities in Puerto Rico (Sec. 312)

Indian Tribes (Sec. 314, 315)

Auto Racing Tracks (317)

Wool Research (Sec. 325)

As can be easily seen, none of the earmarks have anything to do with the current financial crisis that the US is experiencing and many people are justifiably angered that some members of Congress inserted these frivolous amendments into the bailout plan at a time of such great financial crisis. Most of these earmarks provide tax breaks to the above mentioned industries. As a result, Conservatives are livid and the criticism has been scathing.

Other changes in the bailout bill address more legitimate concerns such as the increase in bank deposit amounts that the government will insure from $100,000 to $250,000. Also added was much needed tax relief for small businesses. The bill still remains unpopular with most US taxpayers in general and the addition of earmarks is likely to increase public disapproval.

The revised bill now goes to the house and world financial markets are awaiting their decision. In the meantime, credit markets are virtually frozen and the crisis has spread to Europe and Asia including Forex markets limiting Forex opportunities. The future of the dollar in world currency markets is uncertain at best even with the slight rally against the Euro earlier in the week. Should the bill fail again it is anybody’s guess how markets will react.