One must wonder why Congress is hell bent on passing a plan when so many economists are questioning it even working at all and while other more proven approaches are available.

Congressman Peter DeFazio issued a press release showing the the bitterness of these so called sweeteners being dangled before our representatives on Capital Hill:

the Senate has simply added a number of popular tax provisions, and a 4-year extension of the county payments program, to increase support for a fundamentally flawed bailout bill. They added some tax cuts so Republicans would vote for it, and added mental health parity so that progressives and liberals would pay for it. But, it’s the same flawed plan that the House defeated earlier this week. I have fought long and hard to restore the county payments program and every county in my district depends on funding from the program. But, I cannot vote for the Bush/Paulson bailout which will jeopardize our nation’s financial future by borrowing $700 billion -- $2,300 for every man, woman and child and transfer it to Wall Street financiers.

This particular program is critical to Oregon and was recently cut, sending much of the Oregon rural economy into a tail spin. Nice huh? Either vote our way or toast your district?

The Hill has a staffer noting:

House members who care about fiscal discipline are being backed into a corner here

Economy in Crisis details some of the pork:

Section 325 provides tax breaks for the “wool research fund.” Section 503 contains a provision repealing a 39-cent excise tax on wooden arrows designed for children. Section 309, a tax credit for economic development in America … well, actually that’s America Samoa, not the United States of America. Other beneficiaries of the “rescue legislation” include Hollywood producers, Nascar track builders and Puerto Rico and Virgin Island rum-makers.

The CBO has just released some cost analysis figures and says the tax cuts will add to the deficit $112.3 Billion for the next 5 years and also implies a great unknown on the $700 billion bail out actual cost, much due to the purchasing mechanisms and pricing of these toxic assets.

So while all of this arm twisting and holding vital funds hostage is going on in Congress, more and more experts are questioning if this bail out will have any effect, even a temporary one.

“It’s our view that this package, in a fundamental sense, will not solve the problem,” said Simon Johnson, a former chief economist at the International Monetary Fund. Mr. Johnson said that he had been hoping that the bailout plan would simply stabilize the markets through the presidential elections in November, but that he was now pessimistic about even that

Michael Darda, chief economist at MKM Partners, an investment firm in Greenwich, Conn., said the Treasury’s bailout plan might have even unnerved many investors.

“I don’t see how it can help banks unless it’s clear that the government is going to buy these assets for substantially more than they are worth right now,” Mr. Darda said. “It’s such a big step in terms of government influencing the private sector, and it’s hard for investors to take a leap like that overnight, especially when they don’t know what’s going on.”

One of the pure financial blogs most highly critical of the bail out comments:

The biggest problem with the bailout (aside from my usual gripes) is that the plan's proponents are setting improper expectations around the plan's benefits, by assigning benefits to it that the plan simply isn't capable of delivering. The problem with this is twofold: It suggests that the framers of the plan haven't a bloody clue as to the true dynamics of the economic malaise affecting the country, and it could potentially set the nation up for an even greater confidence crisis when the plan fails to deliver

Economist Joseph Stiglitz now sings the bail out blues:

The rescue plan that was just defeated was far better than what the Bush administration originally proposed. But its basic approach remained critically flawed. First, it relied – once again – on trickle-down economics: somehow, throwing enough money at Wall Street would trickle down to Main Street, helping ordinary workers and homeowners. Trickle-down economics almost never works, and it is no more likely to work this time.

Moreover, the plan assumed that the fundamental problem was one of confidence. That is no doubt part of the problem; but the underlying problem is that financial markets made some very bad loans. There was a housing bubble, and loans were made on the basis of inflated prices.

So, why is a plan that isn't even expected to work being shoved through Congress by the carrot and stick?

Economist Roubini wonders if the increasing credit crunch is occurring because of the now $850 Billion dollar bail out:

It's plain that the current financial crisis is worsening in spite of--or perhaps because of--the Treasury rescue plan.

The strains in financial markets are becoming more, rather than less, severe in spite of the nuclear option of a $700 billion package: Interbank spreads are widening and are at a level never seen before; credit spreads are widening to new peaks; short-term Treasury yields are going back to near-zero levels as there is flight to safety; credit default swap (CDS) spreads for financial institutions are rising to extreme levels as the ban on shorting of financial stock has moved the pressures on financial firms to the CDS market; and stock markets around the world have reacted very negatively to this rescue package

Naked Capitalism has a fairly astounding analysis on the credit crisis with Paulson's plan:

When Paulson dumps out his 700 billion in treasuries it's going to be at the short end. That will drive up rates for short-term treasuries. This will obviously draw even *more* deposits into the treasury MMs. That means even less in the commercial MMs and thus less working credit, the eventual commercial MM product. Hence Paulson's billions remove working capital by competing for the deposits that could get used to make working capital loans. That 700 billion is going to go to fairly long-term mortgage securities. So Paulson's billions divert credit from working capital to long-term mortgages - from where it's most needed to where it's most wasted.

Just a side note, Goldman Sachs is projected to the big winner in this bail out.