Back during the stimulus debate, I had an item about how it’d be a good idea to let cities put their stimulus money toward operating costs for transit systems. Well, it didn’t happen. Currently, “areas with populations of more than 200,000 are prohibited from using their federal transit funding for operating costs,” and are forced to put the money toward new capital projects.

Today, Rep. Peter DeFazio (D-OR) and 26 other House members urged Congress to seize an opportunity to change the policy:

Passenger rail and bus advocates are pressing conferees on the war supplemental bill to include a Senate-passed provision that would allow public transit agencies to spend some of their stimulus dollars on operating expenses, instead of capital improvements. The language in the Senate version of the bill (HR 2346) would let transit agencies use as much as 10 percent of their funding from the economic recovery law (PL 111-5) to fend off personnel and service cuts. Transit received $8.4 billion total in the stimulus.

As Congressional Quarterly reported, “many transit agencies are facing budget deficits that leave them unable to keep up with dramatic increases in ridership. As a result, service and personnel cuts are being proposed in cities across the country.” The Washington Metropolitan Area Transit Authority, for example, is getting ready to lay off 292 employees.

Since one of the goals of the stimulus was to preserve jobs, it makes little sense to prevent cities from saving the jobs of transit employees, particularly as more and more people are turning towards public transportation. Hopefully, Congress makes a better decision this time around.

During the (ultimately failed) effort to pass cram-down legislation through the Senate in April, Republicans were pressuring bailed-out banks to not compromise on the bill. Today, in a disturbingly thorough rehashing of just how much power the banks wielded during that debate, the New York Times provides the identity of one of these senators:

Senator Jon Kyl, the Arizona Republican leading the charge against the bankruptcy change, told bankers there would be consequences if they dealt with the Democrats. According to an April 20 e-mail message between industry officials in touch with Mr. Kyl, he told them “not to make a deal with Durbin and then come looking to Republicans when they need help on something like regulatory restructuring.”

In an interview, Mr. Kyl, the Senate’s No. 2 Republican, did not recall whether he had made the statement, although he remembered telling bankers that he could not defend them if they did not first defend themselves. “I very pointedly said, ‘Don’t make a deal with Durbin on this. You don’t need to. If he has the votes he wouldn’t be dealing,’ ” Mr. Kyl recalled.

As I noted at the time, Kyl was taking a stand against cram-down — a bill aimed at helping troubled homeowners — just as Arizona’s foreclosure rate was spiking. This New York Times report shows that not only was Kyl pushing the banks on cram-down, but he was doubling down and promising to support them on regulatory reform, which is one of the next issues that the Obama administration plans to tackle, much to the banks’ chagrin.

Kyl followed up his performance on cram-down by being one of just five senators to vote against the Credit Cardholders’ Bill of Rights, another bill of which the banks weren’t very fond. In the last five years, Kyl has received more than $1 million from the banking industry and securities firms.

Rep. Colin Peterson (D-MN) said this week, “I will tell you what the problem is — [the banks] give three times more money than the next biggest group. It’s huge the amount of money they put into politics.” And in the first three months of this year, just four of the banking industry’s top trade groups spent nearly as much on lobbying “as they did in all of 2001.”

Back in April, researchers at the University of Kansas released a report showing that for every dollar corporations spent lobbying for a particular income tax break in 2004, they saved $220 in taxes. The goal of providing the tax break — as expressed by the corporation’s lobbyists — was that the money saved would be invested in domestic productions. Congress believed that this is where the money would go, and thus the tax break — which allowed corporations to repatriate overseas earnings at far below the normal tax rate — was granted.

Well, analysts at the National Bureau of Economic Research took a look at what the corporations actually did with the money and it turns out that domestic investment was not high on the list:

Now the most detailed analysis of what actually happened — using confidential government data as well as corporate reports — has estimated what happened to the $299 billion companies brought back from foreign subsidiaries. About 92 percent of it went to shareholders, mostly in the form of increased share buybacks and the rest through increased dividends. There is no evidence that companies that took advantage of the tax break…used the money as Congress expected.

Incidentally, the law “specifically said the money could not be used to raise dividends or to repurchase shares.”

Kristin J. Forbes, an economics professor at the Massachusetts Institute of Technology and one of the authors of the study, said that “the restrictions on how the money will be spent seem to have been completely ineffective“:

“Dell was a great example,” she added, referring to Dell Computer. “They lobbied very hard for the tax holiday. They said part of the money would be brought back to build a new plant in Winston-Salem, N.C. They did bring back $4 billion, and spent $100 million on the plant, which they admitted would have been built anyway. About two months after that, they used $2 billion for a share buyback.”

The researchers do “say their findings did not indicate that any companies violated the law barring use of the money for share repurchases and dividends.” Even if that’s the case, this is one more example of corporation’s gaming the tax system and using their huge presence in Washington to unduly influence tax policy. These numbers should be brought up again and again as the debate over the Obama administration’s corporate tax reforms proceeds.