Spending Bill Avoids Government Shutdown, Includes Automaker Bailout

On Wednesday, the House passed a $630 billion budget bill that includes a generous $25 billion low-interest loan to U.S. automakers and allows the quarter-century ban on offshore dilling to expire. The bill will allow the government to continue operating after Oct. 1, which begins the start of the 2009 fiscal year. If the bill had not passed, the government may have been forced to shutdown. The last time that happened - for five days in Nov. of 1995 and another 21 days between Dec. 16, 1995 and Jan. 6, 1996 - over 800,000 federal employees were sent home and the government was forced to pay out $800 million to furloughed employees at the time.

The shutdown also resulted in the closure of all national parks and the disruption of benefit payments to veterans, seniors and those receiving Medicare and Medicaid. The measure passed Wednesday will allow all non-essential functions of government to continue through March.

In a major, albeit symbolic, victory for Republicans, Congressional Democrats allowed the offshore drilling moratorium to expire, paving the way for oil exploration off both the Pacific and Atlantic coasts. However, Democrats may have simply punted the issue, preferring to deal with it again in January under a new administration. Democrats, in all likelihood will increase their majority in both Congressional chambers in the Nov. elections and could be dealing with a Democratic White House that would easily reissue the moratorium. That risk alone will likely be enough to prevent oil companies from expanding exploration off the coasts.

America’s Big Three automakers also scored a victory by leveraging Congress for a $25 billion loan to retool factories and develop cleaner, more fuel efficient technology. The handouts come as U.S. automakers have been experiencing huge losses due to the plummeting demand for SUV’s. For years Detroit ignored the warning signs of the impending energy crisis and fell behind foreign competitors that have cornered the market on fuel efficient vehicles. Now, the government must bailout another industry experiencing failures that are entirely self-created.

The bill, while necessary to prevent a government shutdown reminiscent of 1995, was not without wasteful spending. Included in the bill were 2,322 earmarks - pork barrel projects - totaling $6.6 billion.

However, the bill received little fanfare as all attention seems to be focused on the Wall Street catastrophe and the likely $700 billion bailout intended to rescue the ailing financial market.

Source CNNMoney.com:

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