YOUR bailout ideas

[cannon_fodder]

I'm not advocating for a huge bailout.  But if one comes why piss it away on banks or failing industry?  Why reward people who bought more house than they should by taking money away from people who live within their means?  Lets stop and think of some other ideas.  I have one... might not be the best but certainly such things should be considered

There are about 11,000,000 unemployed Americans.  Of those about 6,000,000 are "transient" job losses, between jobs, just out of college, normal stuff.  So we need about 5,000,000 jobs to have "full" employment (~5% unemployment is what we want economically speaking.  Room for growth.  Competition for jobs but upward pressure on wages).

Paying a man $35,000 as a median wage (5% more in San Fran, 5% less in Wyoming) - it would cost $175,000,000,000 per year to employ them all.  4 years worth of projects would consume $700 BILLION dollars into Americans pockets in return for services building infrastructure, as a researcher, an engineer, or soldier. SOMETHING to produce for the nation if they must be on uncle Sam's tit.

The other $300 Billion would go towards materials.  Matching funds from states, cities, and citizens would at least double the materials budget.   $600 Billion in raw materials to support steel mills, concrete plants, mines, equipment companies, engineering to go with it.

Light rail projects.  Industrial ports.  Bridge projects.  Long distance high speed trains.  INFRASTRUCTURE that will help America's economy take off when the funk wears off.

OKC to Tulsa Amtrak line - $121M.  From Tulsa to KC - $240mil.  Commuter rail in Tulsa $100mil.  Bridge projects in Oklahoma:  $1 Bil.  

Big numbers to be sure.  But consider those numbers in light of $1,000,000,000,000.00 and all of a sudden it is nothing.  And I'm not in this for pork - allocate the funds on population with the stipulation that cities/states MUST match (limits total pork).  Parks, rails, bridges, ports... whatever INFRASTRUCTURE needs to be built.  Do it.  

Renovations to the Port of Long Beach cost the US Army Corps of Engineers some $2.5B.   New subway lines in DC, Boston, LA or New York.  Or build government owned nuclear power plants and start utilizing the secure storage site.  

DO SOMETHING with that money.  I fear keeping dying companies floating is not the correct answer.  At least let us know what the possibilities are.  I'm getting nervous hearing LARGE numbers thrown around casually when no one really knows what that money might be used for.



It is worth noting that a school of thought says the New Deal lengthened the Great Depression.  Thus, government spending lightens BUT lengthens a recession - instead of curing it.  So, oh great economic experts of the Obama administration and Fed, choose wisely.  But let us know what you are thinking to do with our money that we don't have.

[Gaspar]

Save money.  Reduce your expenses.  Invest only conservatively.

Nothing in the Obama/Pelosi bill addresses the problem.

John Boehner wrote a letter outlining the contents of the bill they have on the floor:

1. The House Democrats' bill will cost each and every household $6,700 additional debt, paid for by our children and grandchildren.  

2. The total cost of this one piece of legislation is almost as much as the annual discretionary budget for the entire federal government.  

3. President Obama has said that his proposed stimulus legislation will create or save three million jobs. This means that this legislation will spend about $275,000 per job. The average household income in the U.S. is $50,000 a year.  

4. The House Democrats' bill provides enough spending - $825 billion - to give every man, woman, and child in America $2,700.  

5. $825 billion is enough to give every person living in poverty in the U.S. $22,000.  

6. $825 billion is enough to give every person in Ohio $72,000.  

7. Although the House Democrats' proposal has been billed as a transportation and infrastructure investment package, in actuality only $30 billion of the bill - or three percent - is for road and highway spending. A recent study from the Congressional Budget Office said that only 25 percent of infrastructure dollars can be spent in the first year, making the one year total less than $7 billion for infrastructure.  

8. Much of the funding within the House Democrats' proposal will go to programs that already have large, unexpended balances. For example, the bill provides $1 billion for Community Development Block Grants (CDBG), which already have $16 billion on hand. And, this year, Congress has plans to rescind $9 billion in highway funding that the states have not yet used.  

9. In 1993, the unemployment rate was virtually the same as the rate today (around seven percent). Yet, then-President Clinton's proposed stimulus legislation ONLY contained $16 billion in spending.  

10. Here are just a few of the programs and projects that have been included in the House Democrats' proposal:      
* $650 million for digital TV coupons.    
* $6 billion for colleges/universities - many which have billion dollar endowments.    
* $166 billion in direct aid to states - many of which have failed to budget wisely.    
* $50 million in funding for the National Endowment of the Arts.    
* $44 million for repairs to U.S. Department of Agriculture headquarters.    
* $200 million for the National Mall, including grass planting.    
* $400 million for "National Treasures."  

11. Almost one-third of the so called tax relief in the House Democrats' bill is spending in disguise, meaning that true tax relief makes up only 24 percent of the total package - not the 40 percent that President-elect Obama had requested.  

12. $825 billion is just the beginning - many Capitol Hill Democrats want to spend even more taxpayer dollars on their "stimulus" plan.

[we vs us]

I'm a Keynesian, so I believe that government is, at certain points, the only entity big enough to  influence the markets to straighten up and fly right.  I think we're definitely at one of those points now.  

I also think that the ills we're experiencing are not primarily based in the housing market.  The CDO market was bigger than the GDP of the entire world before the bubble popped, so I'm viewing the housing markets as more symptom than cause.

However, the general freeze in credit is affecting everything.  Not just consumer credit, but also new business loans, letters of credit to allow shippers to carry cargo from port to port, commercial and industrial real estate development, etc.  Credit is everywhere, and everywhere it's in tatters.

Enter the only other entity that can move entire economies:  the federal gov.  The hole that the credit crisis has dug for us is so deep, that spending has to be big.  I tend to agree that the stimulus package probably isn't big enough, but that there just aren't enough "shovel ready" projects around the nation to get enough cash into the system within a reasonable time.  I also have a hard time understanding what sort of job creation building new infrastructure will support.  I mean, we can keep hiring as many construction guys as we want, but that's not going to mean much for the hundreds of thousands of office workers who've been laid off.  

I assume that that's where the green initiatives and the digitize-our-medical-records thing come in.  Presumably, that's to get the office drones back to work, too, but I'm less convinced of that part than I'd like to be.

Bailout =/ stimulus.  I don't think there's anything in Obama's bill that will "bail out" any particular industry.  He has requested the rest of the TARP, and Paulson's definitely turned that into a bailout fund, so there still may be loans to insolvent businesses.

I DON'T approve of how Paulson's tried to bailout the financial sector.  He's just given the investment banks money in the hope they'll do the right thing and pump the money back into the economy.  BONG.  Wrong answer.  Of course they did what was right for them, and hoarded the cash to shore up their balances. Buh-bye $350billion.  Now sitting on the balance sheets of AIG/BofA/CITI/etc.

But a bailout can work, and it's worked before, both in the US and elsewhere.  Sweden bailed out its banks not too long ago -- actually taking them over and nationalizing them.  They stabilized them and then took them private again and the tax payers actually made money from the sale.  So in that sense, the gov can act as a body shop for battered assets or companies.  Bring in the beaten down hulks of companies and bring out something worth buying.  The kicker is you have to be able to trust the government to actually pretty-up the assets, and make something worth buying by the private sector.

And I also believe that the gov SHOULD be willing to bail out companies in need.  This recession isn't just a slow down in business. It's a credit crash, and that dries up all the usual methods of weathering the storm.  So companies that still might have great fundamentals aren't pulling the loans they might otherwise, simply because the loaning entities can't float it.  If the gov can provide that service, then I'm all for it.  

Incidentally, it's also like being the guy who has the cash to play the down market.  This is an invest-while-it's-cheap situation.  It's a potential winner for the taxpayer.  

As far as the national debt goes . . . well, there's no other place that additional spending will come from.  It ain't coming from private business, I can tell you that.  I can understand some concern about it . . . and the immediate concern might be that the other economies that have been funding our debt to date are ALSO now planning their own spending packages, and so -- for instance China -- might not be willing to buy our bonds.

Ok, look at that.  I wrote a lot.  That's where not editing gets you.  

[Conan71]

How many people are using gov't coupons to buy digital converters they don't even need?  How many more are getting vouchers from friends, getting converters, and selling them on eBay?  The average schmoe doesn't have a clue if his/her TV is digital or not.

That is one of the the dumbest damn government-mandated programs I've ever seen.

Don't ask me for any more until you can learn to manage what you are already taking from me.

I'd predicted months before all this stupid bail-out crap that the middle class will be paying 70% in taxes within 20 years.  

They will pass a tax cut package now, which will raise the % of Americans who don't pay taxes from just over 30% to over 50% (according to Dick Morris, anyhow).  What that will accomplish in the long term is choking debt which will leave no other alternative other than to raise taxes to astounding levels on the rest of us.

Many learned economists are saying that any  proposed stimulus package will not create anywhere close to 2.5 to 3mm jobs, if any.  Many are saying the economy is "bottoming", will continue to do so over the rest of the year, and that the gov't needs to quit trying to tamper with the process.  

[nathanm]

I agree that if we're going to pump a bunch of money into the economy, it should be spent on useful infrastructure.

As far as only construction jobs being created..there will be plenty of need for administrative folks to help design and manage the projects. Accountants to account, lawyers to draft the contracts, and so on.

If we are going to give more money to banks and other big businesses, it needs to have strings attached this time, not just a "here's billions of dollars..do with it what you will"