Bailout? Are We On The Right Path?

“The headlines read these are the worst of times
I do believe its true
I feel so helpless like a boat against the tide
I wish the summer winds could bring back paradise”

Dennis De Young, The Best Of Times
Paradise Theatre, Released January 19, 1981

According to Right.org, the amount of money committed to the bail out stands at $8,439,120,000,000 (almost $8.5 Trillion). Other sources, which includes the media, have stated over the past weeks that it will take over $2 trillion to bail out the banks alone and there is no guarantee that all of the banks will recover. It seems as if every week we hear of another group wanting the U.S. Government to “Bail out” their businesses and corporations. Times, indeed, seem to be ‘the worst of times’, but are we on the right path?

Let me be the first to say that I do not hold a degree in Economics, in fact the only economics expertise I have are a few classes I have taken over the years and my personal dealings with the economy for many years now. I am not an expert by any means, however I am not totally ignorant of how the economy works outside of the classroom and the academic circles either. In other words I am just like millions of other Americans.

Whenever I see those in our Government handing over millions of dollars to the very people who drove their businesses into the position of needing to ask for a bailout – I wonder if that is the wisest choice to make. I fully realize that it is the businesses and corporations out there that ‘create’ jobs and hire our citizens to work so that the citizenry can go out and spend that money to further the wealth of our businesses and corporations so that they can create more jobs and raise salaries for the purpose of keeping the vicious cycle going. Furthermore it is up to us to increase our personal wealth, or blow our money, as we see fit by a variety of methods. I understand all of this, but I don’t understand why there are those who feel that the giving of millions of taxpayer dollars to people who already shown their aptitude for failure. I, like many others, have been taught in the past the basics of economics. I realize that those in the business world create or eliminate jobs which help drive our economy.

These bail-outs are supposed to be loans, not give-away programs. These corporations and government agencies are supposed to use the money wisely and pay back the Federal Government. I am like many others in thinking that the money, i.e. our taxpayer dollars, will not be paid back as many of the experts claim. In the end it will be us, the taxpayer, and our children who will pay the cost — not the business owners and corporate heads.

Think about it, $8.5 Trillion Dollars and counting. That is a lot of money in anyone’s book. What if, instead of going down the path we are going, we decide to give the money to the people who are most responsible for keeping our economy strong — i.e. The People.

I am not against capitalism and I do not believe in ‘sharing the wealth’ as many out there have put forth. If a person goes into business, their main reason ought to be to ‘do well’, you may also call this ‘getting rich’. As the person owning the business, they have the right to accumulate as much wealth as they possibly can and I or anyone else do not have the right to demand any more of their money than we earn. I do not begrudge people like Bill Gates for making billions of dollars and having employees barely earning $20,000 a year. If the employee wants a better income then they should strive to improve themselves, not every job is worth the amount of every other job. On the other hand I am of the nature to appreciate those working for me and treat them as well as I realistically can treat them. My belief that every employee deserves a livable wage is a personal view, not something I demand of others.

So let’s think about this. The US Government is committing us to approximately $8.5 Trillion. The US Government has no money other than that which we give it, therefore this is our $8.5 Trillion to give. Now there are about 305 Million people in the US today, of which there are approximately 120 Million to 150 Million taxpayers. Additionally there are approximately 200 million US Citizens age 25 or older in this country and approximately 204 Million over the age of 20. There are approximately 226 Million in this country who are 18 and older.

If we be reasonable and logical, we could agree that not every person who is 18 or over should get a share of any ‘rebate’ or ‘bail-out’. I propose setting 25 as the minimum age for a ‘bail-out’ because at 25 a person is supposed to have reached the age of full maturity, at least that is what Dr. Phil said on last night’s show. 🙂 So if we assume that there are 200 Million people eligible for a bail-out or rebate, and we use the $8.5 Trillion dollars that we are committed to by the US Government, each share would be approximately $42,500.

What would you do with $42,500 (tax-free)? Remember the idea is to ‘stimulate the economy’.

The fact is that most people would probably spend part or all of the money on things they want, I don’t deceive myself into thinking otherwise. They would view the money as a windfall and simply blow it. You or I may not be able to convince these people that they are blowing their money, for they would be firmly entrenched that their ideas of spending are the best thing to do, but they would blow it never-the-less. Some may spend their money on failing internet businesses, others may blow the money in bars or strip clubs, some would spend their money on things they want and not take care of business as they should. However what about the rest of us?

Many would save their money, in whole or in part, putting it away for a time that they may need it. Others would spend the money on bills and home mortgages, hoping to get their expenses in order enough to ride out these tough times. There will be people who will buy things they wouldn’t buy without such an income, but the items would be things that would be useful to them and items that ‘make sense’ to buy. The outcome would be that the economy would be flooded with over $5 Trillion dollars, being spent as ‘the people’ saw fit. The bulk of the money would flow back into the banks, financial institutions, and businesses of all sorts. The Federal, State and Local governments would receive money from taxes on the items bought. More importantly the people would have an amount of money that they actually could make useful, although it’s not enough to solve all of their problems. Businesses would not be faced with having to pay back a loan that many cannot afford, yet with the influx of money they could expand and hire the unemployed.

There are many pitfalls to this idea as well, perhaps far more pitfalls than simply giving the money to the banks and corporations directly. Many people may end up worse off in the end because they mismanage the money given to them and get themselves further in debt. There are pros and cons to everything.

Now the question poised to you all is “If you are given $40,000 (tax-free), how would that help the economy?”

Stupid idea or Genius? I tend to think it’s closer to a stupid idea, however when reading or hearing what everyday people have been saying — this is a pretty close summation to what they are talking about. The idea, now, would be to look at the idea and try to figure out if there is any redeeming qualities to the ideas at all.

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