I will never tell you that I can predict what Congress is going to do. Based on everything I've been reading for several weeks from every economist in sight who's been asked, I thought the vast majority of the members of the House of Representatives would've figured it out. And sometimes you just do the right thing. Those members who voted against the measure to relieve the very dangerous stresses on banks and the economy, perhaps because they thought the $700 billion price tag was too high, should have known that the markets would react poorly to the legislation failing. How could they not know?! Final score? Monday's loss in market value for S&P 500 stocks came to about $930 billion. You do the math. (See also Congress decides it is worth risking depression from world-class economist Martin Wolf in today's "FT.")
In any event, after these Know-Nothings, Democratic and Republican, heard from their constituents who had lost thousands on Monday, and perhaps were sobered at the very real prospect of a depression staring us in the face, they came to the table. What's this got to do with climate change? I've flogged the question of tax credits for renewables to you here time and again, and I had last written that these appeared to be headed into oblivion in this Congress. Well, not so fast: The Senate is going to include these in the package it's going to vote on today. See this from Reuters and this from the "LA Times"
The whole package, with the $700 billion rescue , or TARP (troubled asset relief program), or bailout, whatever you want to call it , will pass and will go to the House tomorrow. That all the tax credits, billions beyond the renewables portion, will not be fully "paid for" does not seem to concern the Senate, as evidenced by their previous passage of legislation. (See my post below from September 24.)
One of the chief proponents of "pay as you go" accounting , an excellent principle for the most part, don't get me wrong about that , is Steny Hoyer, the powerful Majority Leader of the House. Given the direness of the banking situation, he will undoubtedly go along with the Senate bill's unpaid-for tax credits, and hope to make it up in the next Congress and with the next Presidential administration. He realizes, as many more of his 228 colleagues who voted no on Monday do now, that we're staring into the abyss.
