Menu
Against the Washington bailout
The House passed the $819 billion stimulus bill Wednesday night in the hope of giving a shot in the arm to our comatose economy. The vote was 244-188. Eleven Democrats voted against the bill while no Republicans supported it. Even though pleas were made from both sides of the aisle for bipartisanship, little was to be found.
The Democrats won't scream as loudly over the lack of bipartisanship as they have in the past because they now have the numbers to pass their bills by themselves, with or without the Republicans, which is what happened with this bill. Both parties often conveniently forget that bipartisanship cuts both ways. 233 Democrats voted for the bill which doesn't show much bipartisanship either.
I've been against bailing out the automakers and banks from the beginning. Both institutions displayed either a grievous misunderstanding of the basic rules of capitalism or, even worse, a callous disregard. It started with banks giving home loans to people who didn't qualify to begin with, and then structuring the loans so that the payments would continue to increase or attaching a balloon payment somewhere in the life of the loan that the debtors wouldn't be able to pay either.
Then they sliced and diced the loans, bundled them up and peddled them to other financial concerns and all of this wheeling and dealing finally caught up with them. So they go to our government with hats in hand, begging for "prop-up" money so they can get back on their feet again and the government gives it to them with the specific directive of loaning it out so that people will start buying again. But, for the most part, the banks aren't doing that. They're holding on to the money and, because they are, credit is not only still tight; it's getting tighter.
On the other hand, the auto industry has been mismanaged for decades. They have consistently made vehicles people don't want to buy while foreign automakers have been making vehicles that people ARE buying. These basic mistakes have been compounded by runaway union demands that have significantly increased the cost of every vehicle made. So they continued to dig a deeper and deeper hole for themselves until they too, made their own trek to Washington (in private jets no less) to also ask for bailout money and the government is obviously going to give them what they want too.
Every adult in America understands the concept of belt-tightening and balancing a budget, even those who aren't very good at it. If we make bad economic decisions and continue to make them, we eventually go belly-up financially and there's no one there to pick us up, dust us off, and give us a fresh start.
We have to live with the economic decisions we make and if our situation becomes so dire we have to file bankruptcy, we're looked down on by those who know about it. We're seen as unsavory, undisciplined, and somewhat fraudulent because we're willing to cancel the debts and obligations we made at someone else's expense.
But the same rules don't apply to the economic icons in our society. The banks knew they were making bad and ill-advised home loans to people who couldn't afford them but they continued to do it.
The automakers stubbornly dug their heels into the sand and continued to give in to union demands while putting out inferior products that couldn't compete with foreign brands and then when their continuing bad judgment and unsound business practices finally caught up with them, they went to our government with their hands out to be "saved" and our government is obviously going to do just that, using the excuse that our economy will collapse if it doesn't.
What's the incentive for the major movers and shakers in our economy to practice the same sound business principles that most American individuals do if they know they're going to be bailed out when they fail?
I think Congress and the President should have said no to both groups, accompanied by a stern mandate to tighten their belts, eliminate waste, reduce costs, and cut benefits, just like you and I have to do when times are tough.
If the 819 billion dollars contained in the bailout was divided evenly between the 210 million Americans aged 18 and older, we would each receive a check of almost $4,000 that most of us would put right back into the economy, stimulating spending and economic growth in the process.
In the meantime, the companies and corporations who are doing things right would survive and prosper and those who aren't would fail, just like the rest of us.