Bailout bill includes timber payments

The financial rescue plan approved by Congress on Friday extends a program that pays rural counties hurt by federal logging cutbacks.

The bill, which President Bush immediately signed, also will allow Washington state residents to continue deducting state sales taxes on federal income tax returns. And it extends tax credits for renewable energy such as solar, wind and hydropower, as well as biomass and geothermal electricity.

Senators inserted the timber provision as one of several sweeteners to attract more votes for the bailout bill, which was defeated earlier this week in the House. The House approved the revised version of the bill on Friday, two days after the Senate.

Two Northwest lawmakers switched their votes on Friday. Rep. Jim McDermott, D-Wash. voted no after supporting the initial bill, while Rep. David Wu, D-Ore., voted yes after opposing the bill on Monday.

McDermott said the Senate changes - primarily a series of tax breaks costing more than $100 billion - made the bill worse.

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

McDermott said thousands of people in his Seattle district were "absolutely enraged" by the bailout bill. He called it outrageous that the bill did not extend unemployment benefits for workers who have been laid off, while giving billions of dollars in aid to Wall Street CEOs who caused the economic crisis in the first place. The House later approved a separate bill extending unemployment benefits for those who have used up benefits under current law.

"There is a credit crisis in America to be sure, but there is no question today that there is also a trust crisis in America, every bit as damaging and debilitating," McDermott said. "We cannot solve the first crisis before we address the second crisis."

Wu said he understands the anger that Oregonians have at the "irresponsible few who got us into this mess," but added: "This bill isn't about bailing them out. It's about keeping the rest of us afloat."

Wu said the revised bill was far from ideal, but that he believed the risk of doing nothing was greater than the risks posed by the bill.

"Action is essential to protect Americans' jobs, retirement and financial security," he said. "Instead of just waiting for better economic times to trickle down from Wall Street to Main Street, this bill provides direct relief to everyday Americans."

Wu said he was particularly pleased by inclusion of the timber provision, which lawmakers from both parties have been trying to renew for years.

The law, officially titled the Secure Rural Schools and Community Self-Determination Act but commonly known as "county payments," provides hundreds of millions of dollars to Oregon, Idaho and other states, mostly in the West, that once depended on federal timber sales to pay for schools, libraries and other services in rural areas. In all, payments go to 700 counties in 39 states.

The program expired Tuesday with the end of the fiscal year, but now will be renewed through 2012 at a four-year cost of $3.3 billion.

Voting in favor of the bailout bill were Wu and Rep. Darlene Hooley, D-Ore., as well as Democratic Reps. Brian Baird, Norm Dicks, Rick Larsen and Adam Smith of Washington state, and Republican Reps. Greg Walden of Oregon and Mike Simpson of Idaho.

Voting no were McDermott and Rep. Jay Inslee, D-Wash., as well as Democratic Reps. Earl Blumenauer and Peter DeFazio of Oregon, Republican Reps. Doc Hastings, Cathy McMorris Rodgers and Dave Reichert of Washington, and Rep. Bill Sali, R-Idaho.

Sen. Ron Wyden, D-Ore., who co-sponsored the original timber payments law in 2000 and played a key role in its renewal, hailed the House vote.

"Oregon communities can finally breathe a sigh of relief," he said. Wyden voted against the bailout bill but asked Senate Majority Leader Harry Reid to include the timber provision.

Rep. Nick Rahall, D-W.Va., chairman of the House Natural Resources Committee, called the vote a significant victory for rural America. Many rural areas in his state and across the nation are "struggling under the weight of economic hardship and have been on the brink of slashing essential services such as schools, law enforcement, and other critical local infrastructure," said Rahall, whose state gets about $2 million a year under the program.

Under a new formula approved this week, Oregon will continue to receive the largest share of timber payments - about $254 million in the current budget year - followed by California ($63 million) Washington ($43 million), Idaho ($43 million) and Montana ($32 million).

Eric Schmidt, a spokesman for the Oregon Association of Counties, called extension of the timber law "a day of great elation," but added: "It's a bridge, not a bailout."

Thirty-three of Oregon's 36 counties get some timber money, Schmidt said, and many have taken drastic steps - including firing sheriff's deputies and releasing prisoners - to meet budget shortfalls caused by the delay in timber payments.

Oregon Gov. Ted Kulongoski called passage of the bill "a lifeline that Congress has thrown to Oregon. It was badly needed."

Even so, Kulongoski said no one should expect the program to be continued after the four-year extension.

"This is the end of it. What we have to do in these coming four years is develop a strategy" to compensate for an end to the federal payments, he said.

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Eds: Associated Press writers Brad Cain in Salem, Ore., and Tim Fought in Portland contributed to this story.