Against a bailout mentality

Published 9:41 pm Friday, December 12, 2008

I would venture to guess that if you asked most Americans a year ago to use “bail out” in a sentence they’d use the phrase in reference to bailing out water from a flooding boat or basement. One year later, “bail out” has become a household phrase with a very different context. Our daily news is primarily dominated with company after company pleading to be rescued by the federal government, and political leaders, in response, trying to convince the American public that spending another billion of taxpayers’ dollars will help the overall faltering economy and contribute to boosting the financial situations of American families. But Americans aren’t buying it, and rightfully so.

Perhaps they aren’t buying it because they understand that a “bailout” in its most rudimentary form implies an escape from some immediate and difficult situation. What it doesn’t imply is the thoughtful or systematic solution to the problem that made the bailout necessary. Over and over we hear the same arguments on why we must bailout large, failing companies. In January we were told that our economy needed a $168 billion stimulus boost through consumer spending and that the additional flow of money would protect our economy from recession. With AIG, we were told that $85 billion was needed to prevent AIG’s collapse or else large-scale banking defaults would ensue. When Wall Street asked for a $700 billion bailout, we were told it was because it would clear up the traffic jam of credit and restore confidence in our financial markets. And just this week, the House of Representatives passed a bill to bailout the Big Three automakers on the basis that our economy is too weak to sustain their bankruptcies and that $14 billion will prevent even greater economic disaster.

Had the Senate passed the auto bailout, it would have been the sixth bailout in 2008, totaling 1.3 trillion federal dollars spent to bailout companies, a number so enormous that it is nearly impossible to comprehend. In fact, President Reagan once said that best he could come up with when trying to comprehend a trillion dollars was “that if you had a stack of thousand-dollar bills in your hand only 4 inches high, you’d be a millionaire. A trillion dollars would be a stack of thousand-dollar bills 67 miles high.”

What is clear through all of this is that our economic situation has not improved. Through bailout after bailout, we continue to face a weak economy that is causing families to struggle to pay their monthly bills, confront job loss just before the Christmas holiday, wonder if they can send their children to college, and worry about making ends meet with a shrinking retirement check. Despite all of the attempts to boost our economy, November’s job losses were the worst in 34 years. And with each bailout there is a growing sense that those Americans — especially those who have made wise financial decisions — have been and will continue to be left out in round after round of bailouts.

I voted against each of the bailouts to date because of the fundamental ineffectiveness of rewarding corporations’ poor decisions with the tax dollars of Americans who have spent their lives working to pay their mortgages on time, save for retirement, and balance the budgets of their families. But perhaps an even more compelling reason for Washington to set aside its bailout mentality is the impact this is having on our nation at a very fundamental level.

According to the Office of Management and Budget, in 2008 government spending made up about 20% of our overall economy. If the government spends all the money authorized in the federal bailouts this year alone, that figure will have increased to 30%. This means the presence of our federal government in our overall economy has increased by 50% in just 12 months. What is even more disturbing is if we continue this current trend of multibillion dollar bailouts, in two years government spending will make up half of our overall economy. While this statistic is staggering, even more difficult is the reality that the number represents. As this number rises, the judgment of the market and of the people is increasingly replaced with the judgment of politicians. Since government produces nothing of value in the global marketplace, this trend threatens both the welfare of our economy as well as the freedom of individuals to make the choices that are best for their families.

If we take the time to find the right way to address our economic challenges while preserving our basic economic traditions, we will come out of this economic crisis a more resilient and innovative nation than we have been before. Taxpayers deserve better than a bailout mentality. They deserve a solutions mentality and they ought to demand nothing less from their government.