The Senate passed the bailout bill tonight after sweetening it with $150 billion ($110 billion net of offsets) in new tax breaks, including "extenders" that no doubt will soon be extended again. The bill, originally just 3 pages (although that gave the Treasury excessive authority without oversight), now apparently exceeds 450 pages. Good work, guys.
In a country with a massive and growing fiscal gap, the potential $700 billion cost already was a huge problem. Yes, I know in theory the Treasury might even end up turning a profit on this, but the incentive issues and institutional skill set make me skeptical. Other countries have apparently flipped assets for a profit in this setting, but these days, no matter what the task, ours always seems to be the government that can't.
We are converting the financial crisis into a worsening of the fiscal crisis, and while this particular drop in the bucket may be small, it demonstrates once again the fecklessness that really is worse than anything about the current fiscal projections.
Diane Rogers is right: "a teaspoon of sugar helps the medicine go down." But it's also true that sugar all the time eventually wrecks the teeth, the taste buds, and the digestive system.