The US economy is in a financial crisis, that much is something most people agree upon. How should we fix this crisis? Well, that’s another story.
Many of the greatest minds in our government think that an emergency economic bailout is the best way to stabilize our sagging economy. They stipulate that buying troubled debts from banks will infuse them with the capital they need to continue creating more debt by making new loans. Never mind the fact that unrestrained lending is what got us into this mess in the first place.
So Congress banded together to create The Emergency Economic Stabilization Act of 2008 (here is the full text of the bill. Note, it’s 451 pages long). After passing it back and forth, the bill was passed – but not without a lot of added fluff.
I don’t profess to be an economist, and I can’t say whether or not the bailout plan will work. What I do know is that the bailout plan is unpopular among many people in the US, particularly those in the middle and lower income ranges. But sometimes unpopular decisions are the right decisions to make. Maybe the emergency bailout plan is the best option to help our economy?
Assuming the bailout plan stabilizes our economy, what comes next? How can the government improve the economy in a way that affects the majority of the US populace – what most people refer to as the middle class.
Well, several bloggers and I decided to try and answer that question and we are posting our answer at the same time this morning. You will find links to their articles at the end of this one. None of us is an economist; we are just regular citizens – similar to the majority of the voting population and the kind of people that Congress should keep in mind when making decisions on policy.
This is the question we asked ourselves:
“What is the single most important initiative that the next administration should undertake to improve the economic health of the U.S. middle class?”
“Cut the fat.”
I will not contest the idea behind the emergency bailout bill. As I previously mentioned, I have no training as an economist and I do not know if it will work or not. But it doesn’t take an economist to see that our country could scarcely afford the original version of the $700 billion economic bailout plan, and spending an additional $110 billion in pork barrel spending was not only unnecessary, it was grossly out of line.
The brightest economists in our nation recommended to President Bush that we need this emergency bailout bill to pass or we may face a global financial meltdown.
Here is my question to Congress:
If our economic situation was that perilous, then why wasn’t the bill quickly passed in its original form?
Answer: because it didn’t pander to any special interest groups.
To be fair, the version of the bailout bill that passed had a few enhancements that may have enticed additional Congressional voters. Chief among these were a tax credit for research and development and an increase in insurance for bank accounts, both of which could have a broad economic impact.
But there was also a substantial amount of fluff added to the bill – added expenses that don’t benefit Americans as a whole. Instead, some weak Congressional leaders gave into temptation and peer pressure and withheld their votes from an emergency bill so they could hold out for a sweeter offer – one that would pander to their special interests, never mind that our economy was in an emergency situation.
Here are some of the more disgusting examples of Congressional misuse of power (This list from CNN):
- Provisions related to film and television productions – $478 million over 10 years.
- A refund of excise taxes on rum imported from Puerto Rico and the Virgin Islands – $192 million.
- Extension and modification of duty suspension on wool products, wool research fund and wool duty refunds - $148 million.
- Creation of a seven-year cost recovery period for construction of a motorsports racetrack – $100 million.
- Income averaging for amounts received in connection with the Exxon Valdez litigation – $49 million.
- Transportation fringe benefit to bicycle commuters – $10 million.
- Exemption from the excise tax for a specific arrow used by child archers – $2 million over 10 years.
I don’t have a problem with our government spending money on necessary items. But how can any of these expenses be labeled as an emergency? The answer is, they can’t.
Several Congressional leaders determined they could extort votes for their special interests by using The Emergency Economic Stabilization Act of 2008 as leverage. These members of Congress put their interests and needs before that of the American people.
Congress, if you want to help the average middle class citizen, cut the fat. Spend the money where it is needed most – on projects that benefit the general American economy, not on your special interests.
Here are the other synchroblog participants and their topic:
- Blunt Money: Long-term thinking
- Cash Money Life: Pork-barrel spending
- Clever Dude: Accountability
- Finance Your Life: Energy crisis
- Fiscal Zen: Confidence in banking/lending
- My Dollar Plan: Education
- My Journey to Millions: Less government intervention
- Student Scrooge: Education
- Tough Money Love: Education