Making numerical sense of the “bailout”

September 22, 2008 | By | 9 Replies More

I’m sitting here, stunned by the amount of money that is about to be casually taken out of the U.S. Treasury to “save” the economy.  I’m highly suspicious.  I’m not sure this taxpayer revenue is needed or that it is any more than a band-aid.  Surely, Wall Street (or other businesses) will be back in three months for yet another “emergency” handout.  Why assume otherwise?  Corporations have almost complete control of Congress.  Why assume that we are getting any responsible information at all.  This reminds me of Colin Powell’s infamous talk to the U.N.   It amounts to “BOO!  Give us lots of money or something terrible might happen.”

This “bailout” is welfare for big corporations who really had it coming because they acted recklessly–they acted treasonously .  Unfortunately, Congress became so sated with all of those campaign contributions over the years that reflexively deregulated the big financial firms to the point where the biggest firms became too big to fail.  If they failed, they (as the story goes) would take down the entire U.S. economy with them.  Hence, my use of the word treasonously.

But what about those mind-choking numbers?  $700 Billion to “bail out” the failing financial firms?

If we’re going to have a meaningful discussion, we need to discuss that money in terms that make sense to the average American.  Here’s my suggestion.  Let’s talk about this immense amount of money in terms of how much this “bailout” will cost per typical American family.  There are about 303,000,000 Americans out there.   Divide 700B by 303M and you get $2,300 per person.   But the average American family is 3.14 people. Therefore, the average American family will be paying $7,200 for this “bailout.”

If this bailout were really needed and if we did responsible accounting rather than printing more money to dilute the value of the dollar, the government would send each family a bill for $7,200 to “save the irresponsible Wall Street big shots” and then the revolution would rightfully begin . . .

Oh, and BTW.  What else COULD we do with $700 Billion?  How about this: Build enough solar energy equipment to make the entire U.S. energy independent.  In fact, we could make the U.S. energy independent using solar power for only $400 billion (with a lot left over for cost overruns) and this is not a crazy dream.  This is a real life plan, endorsed by the editors of Scientific American. It’s a plan for doing what many politicians only talk about: “By 2050 solar power could end U.S. dependence on foreign oil and slash greenhouse gas emissions.”

If we only had the will, the discipline and the intelligence to do what we should be doing.  Instead, we are allowing the U.S. continue on its slide toward 3rd world status.

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About the Author ()

Erich Vieth is an attorney focusing on consumer law litigation and appellate practice. He is also a working musician and a writer, having founded Dangerous Intersection in 2006. Erich lives in the Shaw Neighborhood of St. Louis, Missouri, where he lives half-time with his two extraordinary daughters.

Comments (9)

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  1. Hank says:

    Even though it shouldn't – at all – it's always surprised me how the very people who say things like "free health care is impossible" and "social welfare is too generous" won't bat a freakin' eyelid at 700 BILLION dollars of corproate welfare being spoon-fed to the very pack of arseholes whose largesse caused this fiasco to begin with – and even now are getting gazillion dollar bonuses.

    Heckuva job, Wall Street.

  2. Edgar Montrose says:

    Okay, if we're going to do this, let's do it right:

    The people who borrowed more than they could afford are as responsible for this problem as the people who lent it to them (think "addict" and "pusher"). We usually try to give the addict an opportunity to rehabilitate, but we jail the pusher. So, instead of subsidizing the banks, subsidize the borrowers. The honest people who made honest mistakes will use the subsidy to pay off their mortgages; the dishonest people will squander it. It'll still be cheaper than wiping the whole slate clean.

    or

    If We the People subsidize for-profit banks, then they become not-for-profit banks. No dividends, no executive bonuses, no golden parachutes. Any "accidental" profits taxed 100% to pay back the bailout. What? The CEOs and BODs won't sign up for that? Then their banks must not really be in danger of failing.

  3. Erich Vieth says:

    Edgar: Thank you, thank you. I agree 100%. I know of lots of borrowers who over-extended their credit. They truly didn't appreciate the math. That's an indictment of the both them and the school system. But regarding the borrowers, we're talking negligence. Regarding the Lenders, we talking about deliberate, premeditated, conscious, well-considered intentional acts. Absolutely, no dividends. No bonuses. Who the hell do these guys think they are to ask me to clean up their mess?

  4. grumpypilgrim says:

    What troubles me the most about the Bush-proposed bill is Section 8, Review: "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

    Yes, you read that correctly — Bush wants Congress to give the Treasury Secretary $700 billion of public money and then not allow taxpayers *any* recourse if the money is wasted. Would someone explain to me how Bush is not a traitor to this country?

  5. grumpypilgrim says:

    Here's another way to understand the $700 billion bailout: imagine someone gives you $1 million today, tax free. That's a lot of money, right? Now, imagine someone gives you $1 million every day for a month. That's $30 million. Now, imagine someone gives you $1 million every day for a year. That's $365 million. Now, imagine someone gives you $1 million for every day since the day you were born. That's…well, that's a whole lot of money. OK, now, imagine someone gives you $1 million for every day since the day *Jesus Christ* was born. That's $700 billion.

  6. Erich Vieth says:

    Jason Linkins has this to say:

    In short, the so-called "mother of all bailouts," which will transfer $700 billion taxpayer dollars to purchase the distressed assets of several failed financial institutions, will be conducted in a manner unchallengeable by courts and ungovernable by the People's duly sworn representatives. All decision-making power will be consolidated into the Executive Branch – who, we remind you, will have the incentive to act upon this privilege as quickly as possible, before they leave office. The measure will run up the budget deficit by a significant amount, with no guarantee of recouping the outlay, and no fundamental means of holding those who fail to do so accountable.

    http://www.huffingtonpost.com/2008/09/22/dirty-se

  7. Erich Vieth says:

    Dennis Kucinich on the bailout:

    This bailout will not bring real jobs back to America. It will not bring back jobs that make things. It does not rebuild our schools, streets, neighborhoods, parks or bridges. The major product of this financial economy is now debt. Industrial capitalism has been destroyed.

    http://kucinich.us/index.php?option=com_content&t

  8. Alison says:

    Have we ever bailed out anyone who made an honest mistake, or who was the victim of circumstance? Have we ever bailed out a company or industry that had not manipulated the law or taken advantage of legal loopholes that got them into the trouble they're in? In short, have we ever bailed out anyone who really deserved the help? I can't come up with any examples.

    And once that money changes hands, will the people who were hurt get any compensation? Will laws or business practices change to prevent similar problems in the future? Will the recipients be obligated to use the money responsibly, or contribute any of their own ill-gotten gains to remedy the situation? Again, I'm drawing a blank.

    While many of the people who created this situation form a corporate-government network to help one another, insuring the protection of their personal assets, we have one political party decrying "elitism" as if they're excluded from this private club. The uninformed voters of this country are eating it up – or, they have been. This might wake up a few, but certainly not enough. They've been programmed to blame public assistance on this country's economic woes, but know nothing about corporate welfare. They're worried about their guns being taken away, but don't care enough about their freedom to see it eroding all around them. They're suspicious of people with different religions from theirs, different skin colors from theirs, different languages from theirs, different education from theirs, and it has blinded them to the biggest difference that threatens the country, the wealthy and connected versus the rest of us. As long as they're kept busy hating and fearing minor and imaginary threats, they don't have the time or energy to see who's really hurting them.

    As awful as this is, and as angry as it makes me, it still gives me a little hope that a few more people will open their eyes and stop believing everything they're told. If not, then I don't see this leading to anything good at all. We'll all end up working two jobs until we drop dead so that this country's political and corporate leaders don't have to suffer a lifestyle change.

  9. Tim Hogan says:

    "Let them eat cake!"

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