Software Reviews

Updated at 10:40 a.m. PT to reflect the House of Representatives’ approval of the bill.

Last week, the Bush administration proposed a three-page bill to bail out Wall Street to the tune of $700 billion. It died in the U.S. House of Representatives earlier this week.

On Friday, though, the House approved a far bigger, broader, and beefier version of the bill–which has ballooned to a remarkable 442 pages. The vote was 263 to 171, with the bulk of the opposition coming from Republicans. Because the Senate already approved the measure, it now goes to President Bush for his expected signature.

On the theory that this may be a way to convince previously critical Democrats to approve the measure, one large chunk of the bailout bill is devoted to renewable energy, energy-efficient appliances, and so on (the “Energy Improvement and Extension Act of 2008″). The authors hope to lure Republicans with protections from the alternative minimum tax (via the “Tax Extenders and Alternative Minimum Tax Relief Act of 2008″).

That includes, as the New York Post pointed out, millions in tax breaks and related pork for kids’ wooden arrows, Puerto Rican rum producers, auto race tracks, and corporations operating in American Samoa. (The explanation for the latter: StarKist has a large tuna-canning operation in American Samoa. And StarKist’s parent company happens to be located in the district of House Speaker Nancy Pelosi.)

The bill has become, in other words, something most unrelated to the business of bailing out Wall Street. The Beltway term for this is a “Christmas tree bill,” meaning everyone gets to hang their favorite spending projects on it–though by the time Congress gets it through, it more closely resembles a slop bucket.

“We will not Christmas-tree this bill,” Sen. Chuck Schumer, a New York Democrat promised a few days ago. “The times are too urgent. Everyone has their own desires and needs. It’s going to have to wait.”

So much for that idea.

Here’s a look a some of the green-tech measures:

• One-year extension for wind and refined coal energy tax credits. A production credit for electricity produced from renewable marine energy sources (meaning through wave power and river power, or by exploiting the differences in ocean temperature). Energy credits for “small wind properties,” geothermal heat pump systems, and energy-efficient residential properties.

• New renewable-energy bonds. Up to $800 billion in energy bonds may be offered to the public, with a third from “public power providers,” a third from governments, and the remainder from “cooperative electric companies.”

• Tax credits for “cellulosic biofuels” and for “carbon dioxide sequestration.” An extension of an alternative fuel credit. Tax credits for “new qualified plug-in electric-drive motor vehicles.” Bicycle commuters get a nod, as do regulations aimed at “residential top-loading clothes washers.”

IRS undercover operations: Privacy invasion?

The bailout bill also gives the Internal Revenue Service new authority to conduct undercover operations. It would immunize the IRS from a passel of federal laws, including permitting IRS agents to run businesses for an extended sting operation, to open their own personal bank accounts with U.S. tax dollars, and so on. (Think IRS agents posing as accountants or tax preparers and saying, “I’m not sure if that deduction is entirely legal, but it’ll save you $1,000. Want to take it?”) That section had expired as of January 1, 2008, and would now be renewed.

Starting with the so-called Anti-Drug Abuse Act in 1988, the IRS has possessed this authority temporarily, with occasional multiple-year lapses. A 1999 internal report said the IRS had 126 “trained undercover agents” working in field offices at the time. This is the first time that such undercover authority would be made permanent.

Sens. Max Baucus (D) and Chuck Grassley (R) have been pushing to make it permanent for a while, claiming (PDF) in April that: “Undercover operations are an integral part of IRS efforts to detect and prove noncompliance. The temporary status of this provision creates uncertainty, as the IRS plans its undercover efforts from year to year.”

There’s another section of the bailout bill worth noting. It lets the IRS give information from individual tax returns to any federal law enforcement agency investigating suspected “terrorist” activity, which can, in turn, share it with local and state police. Intelligence agencies such as the CIA and the National Security Agency can also receive that information.

The information that can be shared includes “a taxpayer’s identity, the nature, source, or amount of his income, payments, receipts, deductions, exemptions, credits, assets, liabilities, net worth, tax liability, tax withheld, deficiencies, overassessments, or tax payments, whether the taxpayer’s return was, is being, or will be examined or subject to other investigation or processing, or any other data received by, recorded by, prepared by, furnished to, or collected by the Secretary with respect to a return.”

That provision had already existed in federal law and automatically expired on January 1, 2008.

What’s a little odd is that there’s been little to no discussion of the IRS sections of the bailout bill, even though they raise privacy concerns. Treasury Secretary Henry Paulson said this week: “I will continue to work with congressional leaders to find a way forward to pass a comprehensive plan to stabilize our financial system and protect the American people by limiting the prospects of further deterioration in our economy.” He never mentioned the necessity of additional IRS undercover operations.