We all remember the crescendo that built around the time of the initial market crash in September, an event that may well have shifted enough votes toward the president-elect to give the impression of a larger margin-of-victory than pre-crisis polls predicted.
The initial bailout was $700 billion, and Congress rejected the bill, citing the haste with which the bill was written and Congressional fears that it would amount to throwing taxpayer money at Wall Street gamblers and their bad investments. America breathed a sigh of relief. When was the last time our Congress used even a shred of common sense in voting down galactically stupid legislation? (see the PATRIOT Act).
How did our legislative branch top its unheard-of stand against the executive? By waiting four days to add another $150 billion to the package before approving it.
This is cause for concern, not because Congress did something underhanded and stupid, and then broke their arms patting themselves on the back, but because they voted to borrow more money than the next several generations will possibly be able to pay back.
Lost in the chaos were several notable additions to the bill, and I quote: “Increase in limit on cover over of rum excise tax to Puerto Rico and the Virgin Islands,” “seven-year cost recovery period for motorsports racing track facility” and “Extension and modification of duty suspension on wool products; wool research fund; wool duty refunds?”
So what did our $850 billion get us? The politicians need to answer, with their jobs if necessary.
Did we prevent a recession? No. As some of you undoubtedly noticed last week, the revised numbers are in and the last two quarters of 2007 showed negative growth. That makes our recession officially over a year old. Correction, the last two quarters of 2007 were in a recession, but does anyone think that hasn’t continued?
The so-called “bailout” in its approved form set two very alarming precedents. One, Washington said to the financial industry, “we will use taxpayer money to protect the stupid & greedy,” and two, Washington said to large corporations, “we will use taxpayer dollars to ensure you don’t fail.”
This obviously caused the auto industry to ignore conventional wisdom: Declare bankruptcy (a la every freaking airline in the last 20 years), renegotiate your labor contracts to more reasonable levels, and get back to work.
Google “we’ll be taking your money anyway.” If that ad parody doesn’t accurately summarize the situation I don’t know what will. Detroit deserves to fail, they refused to build more efficient vehicles and they signed an unsustainable labor agreement with the United Auto Workers.
The path of a free market is rise and fall. Innovation and creativity, combined with hard work, put you at the top.
Some socialism advocates will say “that just continues the cycle of inequity,” but the two are admirably demonstrating the efficiency of Darwinism.
The Big Three and Wall Street, if not bailed out by federal tax revenues, will cure the inequities. That’s not a bad thing.
The rich would lose what they had because of bad decisions and poor management. This allows those at the middle and bottom to come up with a creative new way to get to the top. Instead Washington’s classic and sole motivation, re-election, is ensuring that the rich people don’t become poor.
The simple fact is that politicians do not know any more about this stuff than any economics major — significantly less actually — but they would rather be seen doing something, and say “I won’t stand idly by,” than admit the truth, which is that they don’t know what they are doing, or why they are doing it.
For those of you concerned with paying back your school loans, don’t worry, the debt that will be left for the grandchildren of infants born years after you read this won’t have a chance in hell of paying it off, because we just keep re-electing the same levels of stupidity.
Seth Stern is a junior undeclared major. His column appears Fridays in the Collegian. Letters and feedback can be sent to firstname.lastname@example.org.