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Tuesday, February 2, 2010

Bad ideas seem to go together

Listening to NPR this morning, I noted that President Obama will be holding a town hall meeting in Nashua, New Hampshire to talk up his small business bail out. I suppose that compared to the Wall Street bailouts, $30 Billion can be considered small, but what will America ultimately get out of this latest effort to get the economy moving again?

I hate to be Johnny Raincloud here, but I'm guessing, 'Not much.'

I saw a quote on MSN Money the other day that said something like, 'If no one is lending, and no one is spending, the economy is in recession,' or something along those lines.

Think about that.

Let's say the President wins approval for his small business bailout and we inject $30 Billion into the coffers of community banks - the target of the money. What happens then?

You get a long line of businesses that aren't doing well lining up to borrow money so they can, ostensibly, expand and create new jobs. But if these small businesses are not doing well right now, what sense does it make to give them loans to hire more people?

Refer to the quote above - I don't care if we give $30 Billion and meet the party of the first part - i.e. someone is lending. Small businesses need people to buy their products. So no matter how much money we lend them, if no one has the money to buy their products, they will just go under later, rather than sooner.

At the risk of beating a dead horse, wouldn't it have been more stimulating to the economy to take the TARP money, this next $30 Billion and all the other bailouts and just divide it up among American families?

I'm no fan of the Government being everyone's rich uncle, but c'mon. According to this NY Times article from this time last year, the U.S. Government has spent a total of roughly $4 Trillion investing, lending, and insuring. that's 4 T*R*I*L*L*I*O*N dollars. And those are figures from a year ago. You do the math...

That's almost $13,000 per person in the United States according to the US Census Bureau population clock. If we take this a step further, there were almost 100 million tax returns filed in 2007 that were classed as taxable by the IRS (see stats). There were another 47 million returns classed as untaxable - I'm guessing people who had earned income but owed no taxes.

Under an individual bailout plan - as opposed to a corporate bailout - if we bailed out taxpayers who filed a return, you're now looking at about $28,000 to each taxpayer.

Which bailout do you think would have been more effective? Paying $28,000 to each taxpayer or bailing out the banks and other corporations? I don't care how much money we give GM and Chrysler, if taxpayers don't have money to buy cars, they don't make any money and a year or two from now, we're back in the same boat we were in before the bailouts.

By putting the bailout money in the taxpayer's pockets, they can get caught up on mortgages, buy new cars, etc. We remove a goodly number of toxic mortgages, the banks are healthier, people can afford to buy cars and other whole goods and companies don't have to lay so many people off - which in turn puts more tax dollars in the treasury.

I don't know, am I crazy? What do you think?


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