A Completely Different Bail Out Program

[Patrick H. Crowe]

I'm not sure this would work. A colleague proposed it to me. What do you think?

The US government is going to spend 2 - 3 trillion dollars on the many bail out proposals. Instead let's give each adult earning under 50K a year, a check, a whopper big one, say $25 to 50K. The more you make the lower the check and any worker making over 150K gets nothing. We hold the total to roughly the present total, i.e. 2- 3 trillion. I think the math would work.

What happens? Many renters buy foreclosed houses. Many folks behind on house payments get caught up. Credit card debt gets paid down. Mostly the cash gets spent. Some squander it on vacations so the resorts have to hire more people, so do the restaurants. The economy gets stimulated like never before. The auto companies don't get bailed out by the government, instead folks begin buying their cars. Kids get sent to college. The unemployed buy training.

What would you do with yours?

Is this better than Paulsen giving 350 billion to lenders and Wall Stree?

I like putting the money in the hands of the citizens. I strongly dislike giving it to greedy Wall Streeters, bankers and incompetent auto companies.

Comments welsome

Patrick H. Crowe

 

[Waxman]

Pay down my highest interest debt.

 

[Whale of a Wash]

It sounds like a plan that would work better than the one they are pushing on us. Obama , should stand up and tell those old dems there plan sucks. Congress wants to just throw money at the problem, without any idea if it would work. The only intelligence coming from the republicans is that they won't support it, meaning when it fails dems get full responsibility. On the remote possibility that it works they won't get much credit for it, because it will probably cost 2-3 trillion, and give us good inflation. A lose- lose situation.

 

[lag]

I would give it to my kids ,and grandkids. Sadly they are going to need it.

 

[Greg Pack]

I don't like the idea of a "bailout" of the U.S consumer. More consumption than production is what caused this problem. It can not continue indefinitely. All we would be doing with a 50K injection to everyone is shifting the debt from the broken banking system to the nation, collectively. I believe there is also substantial risk of a widespread taxpayer revolt when you hand everyone a check whether they paid into the system or not. people are waking up to this.

But to play your game, I would suggest a return of a payers previous years income tax, capped at whatever amount (50K). It would return money to people that actually produce. I know that does not help the working poor but they didn't pay into the system. They have other beneifts.

If you don't like that one how about a voluntary program for all Americans where they could receive their (and their employers) last five years payroll taxes back. In exchange, they agree to delay their SS retirement benefit package for five years. The problem I see with that is that could topple the SS ponzi scheme that already exists.

Another alternative would be a HUGE SBA program (50-100 bil) that increased SBA guarantees to 80% with great preference to domestic manufacturing. Banks and individuals would risk 10% each. This would help strengthen our manufacturing base, which is what is going to be necessary if we're going to right the ship.

 

[rph9168]

The problem is that everyone seems to want a quick fix. It took us a while to get where we are at and it will take a while to recover. I see a need to something at almost all levels of the problem. Obviously there must measures to restore confidence in our financial institutions to reassure the global community that we are on a sound path to recovery. There must also be measures to encourage employers in all sectors to create or keep jobs rather than eliminating them. Finally there needs to be an element that will create responsible use of credit and purchasing power by the consuming public.

Giving money to non-productive individuals who pay nothing into the system seems to me to be trying to put out the fire by pouring on more gasoline. If we continue to support people who either refuse to work or cannot work due to lack of skills we are defeating most of what we would be trying to accomplish. Anyone in this situation that is receiving money should either be participating in a job training program or be required to prove they are actively seeking work.

What is the greatest concern is how much government interference and direction is involved. The more the government gets involved the more layers of useless bureaucracy is usually created. The government at all levels need to develop fiscal responsibility. The pork found in the so-call Stimulus Bill proves that our current leadership is more self-involved in their own little petty projects than focusing on the problem as a whole. I, like many who have expressed their opinions here, am worried about what the future holds. The past performance of our politicians does not instill a great deal of confidence and the feelings that we will endure in spite of our government is no great consolation.

 

[Sequoia]

Bailout

To her credit, during the Presidential campaign Hillary Clinton was the only candidate brave enough to say that we need to confront the Chinese regarding their growing ownership of our national debt. (They currently hold over 1 trillion of it.)

Now, the campaign is over, she is Secretary of State, and last week she was over there shamelessly begging them to keep buying Treasuries so we can finance our bailouts. So much for the prestige of the U.S.A. when our senior diplomat is reduced to .... pleading with the Chinese.

Does anyone even believe there is available bailout money for anyone, whether companies or individuals?

I believe the biggest effect from the stimulus will be to stimulate inflation. Maybe that is the pols plan-- spend like drunken sailors now, pay back at half the rate once the inflation tiger takes hold. But that only works if you believe that they actually have a plan, that is ....

 

[rph9168]

Our politicians are good at begging for money. Unfortunately they are also good at wasting it.

 

[Greg Pack]

The Chinese and petro states have us by the short hairs. It's like they are the shopkeeper and they're giving us in-store credit. If they decide to cut us off we're screwed.

 

[jfmoran]

Pat,

While this may sound like a great idea, the problem that I see is it would create inflation, maybe runaway inflation. The Fed and our goverment are trying to walk a high wire right now between not causing deflation or inflation. Obviously deflation has occured, we just have to look at housing to see that, but if too much money is pumped into the economy too fast then the demand outstrips production and prices will skyrocket reducing the value of the dollar significantly.

With regard to the Chines in someone elses post it is a common misconception that they "have us by the short hairs". The truth is they own less than 10% of our national debt and they need us as much as we need them. They need us to buy the crap they produce and we need them to invest in our T-bills. It's a mutual co-dependency. If they stop buying our debt, we stop buying there crap and they will have a much bigger problem on their hands than we will since they have what... 6.5 times the population we have?

Our problem is not our debt, our problem is our deficit. Our debt can grow infinitely as long as we can make the interest payments. The problem is bringing in enough money to cover the payments. The only way that will happen is to redistribute wealth or if you prefer raise taxes. We are headed like a speeding train towards European Socialism... higher taxes, and an ever expanding goverment. Google "value added tax", that's where we're headed.

 

[Patrick H. Crowe]

Dear jfMoran:

You may be right. I only pose the question. It seems to me the situation is unlike all previous ones.

So far we know what will NOT begin to work, i.e. Bush/Paulsen and their feeble, pusillanimous efforts, right?

Obama's efforts are as yet untested but critics seem to abound. Some claim it's too much, some, too little.

The core of the message that I liked is that the bail out EMPOWERS the people of modest incomes. Don't you like that?

The Wall Streeters, like Ric Santelli on CNBC, whine about having their tax money used to bail out foreclosures. Meantime, the pusillanimous freks take bail out mony galore. The stench and hyprocisy are everywhere.

Power to the people - - most of them could actually tell you what they spent the money for, right.

I don't know if it would work. All precious posters seem to me to make very resonable and productive claims about how they would spend the money - - please note the complete absence of multi million dollar bonuses.

Patrick H. Crowe

 

[Greg Pack]

Pat,

Wow, what a visionary! In the dead of night last night the an economic stimulus bill much like you suggested was passed! They have already started handing out stimulus checks!

Here's the news link:

http://rackjite.com/archives/2488-Dave-Chappelle,-the-Reparations-Video-is-Obama-Back.html

 

[jfmoran]

Power to the people is a joke since our only power is to vote and less than half of us do that, more like Apathy of the People. Please explain to me how this or the previous or the yet to be announced bailouts "Empowers the people." Obama's bailout plan will work. it will do everything it is designed to do which is make our entire society, from Corporate America on down to the welfare class, completely dependent upon government for its existence. Our society has succeeded in creating a welfare state. Obama didn't create it, but watch the rate at which he accelerates it.

 

[Patrick H. Crowe]

Dear jfmoran:

You asked how such a plan "empowers the people" right? I assume your question was serious. Here's how.

If the money is given directly to individuals then they are 100% free to spend it as they see fit. To me, that's very clearly POWER.

The evidence about money given to Wall Street and Bankers by Bush/Paulsen only shows that they have no idea what it was spent on except for some totally outlandish bonuses, right? To me that's corrupt, pusllanimuse, a craven HOAX.

I grant no one knows what will work because the situation is unique. I'm pleading the case for discussion of multiple options.

Patrick H. Crowe

 

[jfmoran]

Not Empowerment

Pat,

I hear what you are saying and here is my response: People are not empowered when they are given something for free, I would argue that they are in fact enlsaved. Witness generations of families on welfare and government assistance programs, are they empowered? Witness these clowns on Wall Street, the best and the brightest (I might add many of whom probably graduated from almighty Harvard and other Top level schools of higher learning) standing in line with their hand out AGAIN! Are they being empowered by our government? It's welfare no mater how you look at it, whether the lady with 14 kids is sitting there with her handout or the CEO from XYZ company with the Harvard degree is sitting there with his hand out. We are not being empowered we are being enslaved. There is nothing empowering in this Stimulus bill or your hypothetical one. We are strung out on entitlements from Wall Street to Main Street, and nobody wants to perform an intervention.

 

[pcb]

Pat, I totally understand what you are saying for once. I only see one problem. If you took all the people on welfare, in forclosure, and in debt up to you know where and gave them $1 million today, they would be broke, in forclosure, and still in debt tomorrow.
I for the life of me can't figure out how what they call a stimulus package is supposed to work. It seems to me more like a government spending spree disgused in something that is supposed to help us. If people sit around and wait for the govt. to help them then they'll die waiting. The best thing anyone can do is quit watching the news, quit reading the paper, and go on about life as usual.

 

[Patrick H. Crowe]

Dear jfmoran & pcb:

You may be right. My posting of the plan of a friend, I'll admit, was born of frustration and near dispair. It's easy to fault.

What should we do?
PHC

 

[ted mcmeekin]

Pat, concept is good--but you left out the low life pork barrel politicians in those to blame. Make it a LOAN with future SS as colateral (as suggestred above) and hold any other assets as colateral but with reasonable time term. If they default, sell assets at auction and reduce future ss accordingly.

I guess we can dream that our leaders would require responsibility and accountability in return for some relief--hell when many cabinet nominees do'nt pay their taxes, it is difficult to suggest tax payers should be held accountable.

Ted

 

[rph9168]

The problem is that everyone wants the solution to be "painless" and quick. Unfortunately I don't think that is either realistic or even desirable to a certain extent.

My grandfather was a small business owner and lost everything in the Great Depression. He had to work very hard and go through a lot of personal sacrifice to make things work for him. My dad saw this as a youth and the life lessons he learned about responsible living and taking care of his finances stuck with him until his death.

Almost all of this mess has been caused by the "entitlement" attitude of the government and citizens. Why is everyone "entitled" to a quality way of life unless they are productive citizens that use their abilities in a sensible way and live within their means?

I don't have all the answers but I think that terms of credit must be tightened and both the government and people need to live more within their means. The government needs to create programs that work to encourage companies to develop a better infrastructure that will create a solid platform to operate on. To "give" people and businesses money without earning it seems to me to encourage the "entitlement" attitude and is simply a shortcut for politicians to get people off their back. As far as the Stimulus Package I see it as more of the same, throwing good money on bad ideas.

I listened to Obama's speech last night for as long as I could. All I heard was the same old rhetoric with little detail on how we are going to accomplish all these great feats. Without hard work and some struggle I feel we are only setting the stage for a repeat of past failures instead of creating a better future.

 

[rph9168]

Chicago Tea Party?

Maybe we should have a "Chicago Tea Party" to wake up the government. Interesting take on this.

http://www.youtube.com/watch?v=7nFVsJ7j_ME