Public Law 110-343
Encyclopedia
Act of Congress
An Act of Congress is a statute enacted by government with a legislature named "Congress," such as the United States Congress or the Congress of the Philippines....
signed into law by U.S. President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
, which was designed to mitigate the growing financial crisis of 2007–2010 by giving relief to so-called "Troubled Assets."
Its formal title is "An Act To provide authority for the Federal Government to purchase and insure certain types of troubled assets for the purposes of providing stability to and preventing disruption in the economy and financial system and protecting taxpayers, to amend the Internal Revenue Code of 1986 to provide incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes."
The Act created a $700 billion Troubled Asset Relief Program under the Emergency Economic Stabilization Act of 2008
Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 The Emergency Economic Stabilization Act of 2008 (Division A of , commonly referred to as a bailout of the U.S. financial system, is a law enacted in response to the subprime mortgage crisis...
(division A), and also enacted the Energy Improvement and Extension Act of 2008 (division B), Tax Extenders and Alternative Minimum Tax Relief Act of 2008 (division C), which also included the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, and the Heartland Disaster Tax Relief Act of 2008.
Legislative history
The first version of the Emergency Economic Stabilization Act of 2008 (structured as an amendment to ) was rejected by the House of Representatives on September 29.After its defeat, Senate leaders decided to amend an existing bill from the House in order to circumvent the revenue origination clause of U.S. Constitution, and chose H.R. 1424 as the vehicle for the legislation.
H.R. 1424 was sponsored by United States House Representative
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
Patrick J. Kennedy
Patrick J. Kennedy
Patrick Joseph Kennedy II is the former U.S. Representative for , serving from 1995 until 2011. He is a member of the Democratic Party. The district includes all of Bristol County and Newport County, and parts of Providence County. Kennedy did not seek re-election in 2010.A member of the Kennedy...
.
On September 30, 2008, Senate Majority Leader Harry Reid
Harry Reid
Harry Mason Reid is the senior United States Senator from Nevada, serving since 1987. A member of the Democratic Party, he has been the Senate Majority Leader since January 2007, having previously served as Minority Leader and Minority and Majority Whip.Previously, Reid was a member of the U.S...
and Minority Leader Mitch McConnell
Mitch McConnell
Addison Mitchell "Mitch" McConnell, Jr. is the senior United States Senator from Kentucky and the Republican Minority Leader.- Early life, education, and military service :...
announced the proposed draft had been formalized for the amendment that would transform H.R. 1424 into the Senate version of the Emergency Economic Stabilization Act of 2008.
On October 1, 2008, the amendment to H.R. 1424 was approved by a vote of 74 to 25, and the entire amended bill was passed by 74 to 25, (with one not voting, the cancer-stricken Senator Ted Kennedy
Ted Kennedy
Edward Moore "Ted" Kennedy was a United States Senator from Massachusetts and a member of the Democratic Party. Serving almost 47 years, he was the second most senior member of the Senate when he died and is the fourth-longest-serving senator in United States history...
). The bill was returned to the House for consideration.
On October 3, 2008, the bill as passed by the Senate was accepted by a vote of 263 to 171 in the House. Every member of the House voted, though the House had a vacant seat of the recently-deceased Stephanie Tubbs Jones
Stephanie Tubbs Jones
Stephanie "Tubbs" Jones was a Democratic politician and member of the United States House of Representatives. She represented the 11th District of Ohio, which encompasses most of downtown and eastern Cleveland and many of the eastern suburbs in Cuyahoga County, including Euclid, Cleveland Heights,...
of Ohio. President George W. Bush
George W. Bush
George Walker Bush is an American politician who served as the 43rd President of the United States, from 2001 to 2009. Before that, he was the 46th Governor of Texas, having served from 1995 to 2000....
signed the bill into law a few hours later.
Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008 is part of an effort to bail out firms holding mortgage-backed securities in an attempt to restore liquidity to the credit markets.Energy Improvement and Extension Act of 2008
The Energy Improvement and Extension Act of 2008 contains a new tax credit for plug-in hybrid electric vehiclePlug-in hybrid electric vehicle
A plug-in hybrid electric vehicle , plug-in hybrid vehicle , or plug-in hybrid is a hybrid vehicle which utilizes rechargeable batteries, or another energy storage device, that can be restored to full charge by connecting a plug to an external electric power source...
s for less than a year after the first 250,000 are sold. The credit is a base $2,500 plus $417 for each kWh of battery pack capacity in excess of 4 kWh to a maximum of $15,000 for any vehicle with a gross vehicle weight rating
Gross vehicle weight rating
A gross vehicle weight rating is the maximum allowable total weight of a road vehicle or trailer when loaded - i.e., including the weight of the vehicle itself plus passengers, and cargo....
of more than 26000 pounds (11,793.4 kg) and up to $7,500 for 12 kWh or more in passenger cars (vehicles up to 8500 pounds (3,855.5 kg) ).
It also extends existing tax credits for renewable energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
initiatives, including cellulosic ethanol
Cellulosic ethanol
Cellulosic ethanol is a biofuel produced from wood, grasses, or the non-edible parts of plants.It is a type of biofuel produced from lignocellulose, a structural material that comprises much of the mass of plants. Lignocellulose is composed mainly of cellulose, hemicellulose and lignin...
and biodiesel
Biodiesel
Biodiesel refers to a vegetable oil- or animal fat-based diesel fuel consisting of long-chain alkyl esters. Biodiesel is typically made by chemically reacting lipids with an alcohol....
development, and wind
Wind power in the United States
As of the third quarter of 2011, the cumulative installed capacity of wind power in the United States was 43,461 megawatts , making it second in the world, behind China. In 2010 wind power accounted for 2.3% of the electricity generated in the United States...
, solar, geothermal
Geothermal power
Geothermal energy is thermal energy generated and stored in the Earth. Thermal energy is the energy that determines the temperature of matter. Earth's geothermal energy originates from the original formation of the planet and from radioactive decay of minerals...
and hydro-electric power. It establishes electricity
Electricity
Electricity is a general term encompassing a variety of phenomena resulting from the presence and flow of electric charge. These include many easily recognizable phenomena, such as lightning, static electricity, and the flow of electrical current in an electrical wire...
as a clean-burning fuel for tax purposes.
Tax Extenders and Alternative Minimum Tax Relief Act of 2008
The Tax Extenders and Alternative Minimum Tax Relief Act includes $100 billion in tax breaks for businesses and the middle classMiddle class
The middle class is any class of people in the middle of a societal hierarchy. In Weberian socio-economic terms, the middle class is the broad group of people in contemporary society who fall socio-economically between the working class and upper class....
, plus a provision to raise the cap on federal deposit insurance from $100,000 to $250,000.
The Act keeps the alternative minimum tax
Alternative Minimum Tax
The Alternative Minimum Tax is an income tax imposed by the United States federal government on individuals, corporations, estates, and trusts. AMT is imposed at a nearly flat rate on an adjusted amount of taxable income above a certain threshold . This exemption is substantially higher than the...
from hitting 20 million middle-income Americans. It provides $8 billion in tax relief for those hit by natural disasters in the Midwest, Texas
Texas
Texas is the second largest U.S. state by both area and population, and the largest state by area in the contiguous United States.The name, based on the Caddo word "Tejas" meaning "friends" or "allies", was applied by the Spanish to the Caddo themselves and to the region of their settlement in...
and Louisiana
Louisiana
Louisiana is a state located in the southern region of the United States of America. Its capital is Baton Rouge and largest city is New Orleans. Louisiana is the only state in the U.S. with political subdivisions termed parishes, which are local governments equivalent to counties...
.
As a whole, the Senate tax package would cost $150.5 billion over 10 years. Roughly $43.5 billion would be offset by several revenue-raising provisions. Hedge fund
Hedge fund
A hedge fund is a private pool of capital actively managed by an investment adviser. Hedge funds are only open for investment to a limited number of accredited or qualified investors who meet criteria set by regulators. These investors can be institutions, such as pension funds, university...
managers would be forbidden from using offshore corporations to defer paying taxes.
The bill freezes a tax deduction
Tax deduction
Income tax systems generally allow a tax deduction, i.e., a reduction of the income subject to tax, for various items, especially expenses incurred to produce income. Often these deductions are subject to limitations or conditions...
that oil and gas companies get for certain domestic production activities. The deduction, now 6 percent, is scheduled to rise to 9 percent in 2010.
The provisions of the tax bill included:
- A temporary increase in Federal Deposit Insurance CorporationFederal Deposit Insurance CorporationThe Federal Deposit Insurance Corporation is a United States government corporation created by the Glass–Steagall Act of 1933. It provides deposit insurance, which guarantees the safety of deposits in member banks, currently up to $250,000 per depositor per bank. , the FDIC insures deposits at...
deposit insuranceDeposit insuranceExplicit deposit insurance is a measure implemented in many countries to protect bank depositors, in full or in part, from losses caused by a bank's inability to pay its debts when due...
limit from $100,000 to $250,000 until December 2009 - Tax breaks for businesses
- Tax creditTax creditA tax credit is a sum deducted from the total amount a taxpayer owes to the state. A tax credit may be granted for various types of taxes, such as an income tax, property tax, or VAT. It may be granted in recognition of taxes already paid, as a subsidy, or to encourage investment or other behaviors...
s for the use of alternative energyAlternative energyAlternative energy is an umbrella term that refers to any source of usable energy intended to replace fuel sources without the undesired consequences of the replaced fuels....
and plug-in hybrids - Tax credits for research and developmentResearch and developmentThe phrase research and development , according to the Organization for Economic Co-operation and Development, refers to "creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and society, and the use of this stock of...
- Expansion of the child tax creditChild tax creditA child tax credit is the name for tax credits issued in some countries that depends on the number of dependent children in a family. The credit may depend on other factors as well: typically it depends on income level. For example, in the United States, only families making less than $110K per...
- Protection from the Alternative Minimum TaxAlternative Minimum TaxThe Alternative Minimum Tax is an income tax imposed by the United States federal government on individuals, corporations, estates, and trusts. AMT is imposed at a nearly flat rate on an adjusted amount of taxable income above a certain threshold . This exemption is substantially higher than the...
- Tax reductions for victims of severe weather (e.g. tornadoes, floods, hurricanes)
- Extension of unemployment insurance
- A USD $1,000 tax credit for low income homeowners
- Tax breaks and credit extensions for the following:
- "Certain wooden arrows designed for use by children" (Sec 503)
- WoolWoolWool is the textile fiber obtained from sheep and certain other animals, including cashmere from goats, mohair from goats, qiviut from muskoxen, vicuña, alpaca, camel from animals in the camel family, and angora from rabbits....
research (Sec. 325) - FilmFilmmakingFilmmaking is the process of making a film, from an initial story, idea, or commission, through scriptwriting, casting, shooting, directing, editing, and screening the finished product before an audience that may result in a theatrical release or television program...
and television productionsTelevision producerThe primary role of a television Producer is to allow all aspects of video production, ranging from show idea development and cast hiring to shoot supervision and fact-checking...
(Sec. 502) - Litigants in the 1989 Exxon-Valdez oil spillExxon Shipping Co. v. BakerExxon Shipping Co. v. Baker, 554 U.S. 471 , was a case decided by the Supreme Court of the United States. The Court ruled in a 5-3 decision that the punitive damages awarded to the victims of the Exxon Valdez oil spill should be reduced from US$2.5 billion to US$500 million.The case was appealed...
(Sec. 504) - Virgin Island and Puerto RicanPuerto RicoPuerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...
rumRumRum is a distilled alcoholic beverage made from sugarcane by-products such as molasses, or directly from sugarcane juice, by a process of fermentation and distillation. The distillate, a clear liquid, is then usually aged in oak barrels...
(Section 308) - American SamoaAmerican SamoaAmerican Samoa is an unincorporated territory of the United States located in the South Pacific Ocean, southeast of the sovereign state of Samoa...
(Sec. 309) - Mine rescue teams (Sec. 310)
- Mine safety equipment (Sec. 311)
- Domestic production activities in Puerto Rico (Sec. 312)
- Indian tribes (Sec. 314, 315)
- Railroads (Sec. 316)
- Auto racing tracks (317)
- District of Columbia (Sec. 322)
Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (a part of Division C) mandates that if U.S. health insuranceHealth insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
companies provide coverage for mental health and substance abuse, the coverage must be equal for conditions such as psychological disorders, alcoholism
Alcoholism
Alcoholism is a broad term for problems with alcohol, and is generally used to mean compulsive and uncontrolled consumption of alcoholic beverages, usually to the detriment of the drinker's health, personal relationships, and social standing...
, and drug addiction.
Cost
The Act increased the statutory limit on the public debt by US$ 700 billion to US$ 11.3 trillion. However, the legislation is designed to have a net zero long-term cost, and includes language that mandates the President and Congress to develop a plan to recoup any money that is not recouped within 5 years.Reception
Journalists and critics commented that portions of the bill contained earmarkEarmark (politics)
In United States politics, an earmark is a legislative provision that directs approved funds to be spent on specific projects, or that directs specific exemptions from taxes or mandated fees...
s and pork barrel
Pork barrel
Pork barrel is a derogatory term referring to appropriation of government spending for localized projects secured solely or primarily to bring money to a representative's district...
spending.