‘Sweeteners’ help Northwest swallow deal

U.S. Rep. Brian Baird explains his position on the bailout bill at Hockinson High School Tuesday. (Troy Wayrynen/The Columbian files)

Lingering bitterness over a $700 billion financial bailout may be eased by a few sweeteners, including a sales tax deduction worth $430 million a year to Washington taxpayers.

President Bush signed legislation Friday that also extends a payment program for schools and counties in rural areas hammered by federal logging cutbacks.

Congress loaded the final bill with goodies to ensure its passage, including a two-year extension of sales tax deductibility for taxpayers in Washington and other states that have a sales tax but no state income tax.

Rep. Brian Baird, D-Vancouver, championed the issue during his 1998 campaign and has made it a primary focus during his 10 years in Congress.

“Each year, sales tax deductibility brings more than $430 million back into the pockets of Washington residents,” he said in a statement. “In such uncertain economic times, we simply couldn’t afford not to pass it.”

Sen. Maria Cantwell, D-Wash., voted against the bailout earlier this week. After President Bush signed the bill into law, Cantwell released a statement supporting the two-year extension, which she said would save the typical Washington taxpayer $600 a year.

In 2006, more than 880,000 Washingtonians claimed the deduction, and 49 percent of those taxpayers made less than $75,000, according to Cantwell’s office.

“Congress needs to make it a priority to make this deduction permanent,” Cantwell said in her statement, “rather than taking a piecemeal approach to providing relief to families that are feeling squeezed every day by prices that go up and wages that are not rising.”

Constituent outrage

Friday’s vote ends two weeks of financial agony, with Wall Street warning of imminent collapse and taxpayers steaming about being stuck with a gigantic bill.

Baird said he received thousands of e-mails and hundreds of phone calls from constituents upset about the $700 billion bailout. But with Treasury Secretary Henry Paulson and other federal officials warning the nation “could soon face conditions worse than the Great Depression, doing nothing was not an option,” Baird said following Friday’s vote.

“If we do not act, millions of people will lose their jobs, their retirement savings,” he said in his statement. “Their businesses and farms will disappear, and a financial catastrophe will ensue. We’ve been put in a terrible situation. While this bill is far from perfect, it will help prevent the current economic crisis from getting worse.”

Baird said he insisted the bailout protect American taxpayers from potential losses.

“This was key for me,” he said in his statement. “The average taxpayer didn’t create this problem. They shouldn’t be left holding the bag for it. Under our plan, five years from now, the president will be required to submit a proposal to impose fees or taxes on Wall Street to recoup any losses. However, if these investments turn a profit, we will all share in that profit.”

Baird was among the 172 House Democrats, along with 91 Republicans, who voted for the bailout. The five-term congressman also supported the package the House rejected earlier this week.

Only two Northwest lawmakers flipped their votes Friday. Rep. Jim McDermott, D-Wash., voted no after supporting Monday’s bill; Rep. David Wu, D-Ore., switched from no to yes.

McDermott said the changes inserted by the Senate, primarily a series of tax breaks costing more than $100 billion, made the legislation worse.

“The Senate dug an enormous ditch alongside Main Street, and they want the House to drive into it,” McDermott said in a statement. “That is exactly where the President has driven this economy over seven years.”

Baird sounded a more positive note and said the legislation will prevent executives who presided over the financial crisis from reaping huge salaries and bonuses.

“Any company that chooses to participate in the program will not be able to offer their departing executives exorbitant severance packages,” he said. “In companies where the government is making a direct purchase, it will also place strict limits on executive salaries and will end the tax deduction for executive salaries over $500,000.

“For the first time in a long while, adult supervision is returning to Wall Street.”
Washington’s House delegation split on Friday’s bill. Joining Baird in voting for the bailout were Democrats Norm Dicks, Rick Larsen and Adam Smith. Opposing the bill were McDermott, along with fellow Democrat Jay Inslee and Republicans Doc Hastings, Cathy McMorris Rodgers and Dave Reichert.

Rural school, county relief

Representatives of rural communities had reason to celebrate Friday: the legislation includes a four-year extension of federal payments to compensate for the loss of logging receipts.

For Skamania County leaders, who personally lobbied to keep federal payments alive, the relief was palpable.

“I am ecstatic,” said county Commissioner Paul Pearce, reached by telephone in Washington, D.C., where he had been applying some last-second pressure to save the payments program.

Under the new law, annual timber payments received in Stevenson each December will ratchet down 10 percent a year, to just 60 percent of pre-2007 levels in late 2011.

But the $3 million-plus Skamania County will get this year accounts for about 47 percent of the county’s general budget. That will spare 75 full- and part-time county employees, out of about 200 total workers, from probable layoffs in 2009 had the program expired, Pearce said.

“We knew we’d be in (the bailout); we were certainly nervous as to how the vote was going to go,” Pearce said.

Pearce, a Republican running for re-election, praised Baird and Sen. Patty Murray, D-Wash., “for their leadership, stepping up, not just for (rural schools) but for the whole package.”

Stevenson-Carson school board member Scott Pineo, who doubles as Skamania County’s parks and recreation director, said the school district’s 2008-09 budget already taps into reserves to break even.

The annual timber payment is more than 30 percent of the district’s operating budget. Without it, deep program cuts would have been made in 2009, including many extracurricular activities, Pineo said.

Instead, the district has breathing room to “thoughtfully” plan adjustments, he said. Already, the school board has committed to floating a local school levy measure next March or May for a permanent funding solution, something voters haven’t seen in a generation, he said.

Besides the nearly 1,000 students in the Stevenson-Carson school district, the payments are a lifeline for the tiny Mount Pleasant, Skamania and Mill A school districts, which serve about 200 more students.

“It gives us some breathing room,” said Pineo, who made six Washington lobbying trips. “We are so relieved to finally be able to plan our financial future.”