If what the gov. wanted to do was to make sure the banks did not fail do to bad RE investments, that RE values stabilized, the public slide into bankruptcies were halted, and that banks were paid off for the loans then why not simply give the bailout cash to the public under the condition that it pay off outstanding loans and mortgages? The end result would have been for people to have less debt and therefor be more willing to buy goods, the banks would have the bad investments paid off (as well as some of the good ones) and would have healthier balance sheets and not be saddled with either property or bad mortgages. They would be willing to lend (under new tighter restrictions to keep this from happening again) out monies they had (and hadn't lost), and small businesses would benefit as capital to them would not be tied up... No one would lose and everyone and every sector would gain.
The car companies? Rather than bail them out with loans and cash of $9 Billion, why doesn't the federal government buy 450,000 cars at $20,000 each? The government could sell them to the public for pennies on the dollar, or gift them to worthy poor people, or heck, have a lottery... Or just put in a program funded by the monies they would have given in gift payments to the car manufacturers whereby the public could get grants for 50% off an American car, etc. Whatever. There are many ways of passing the money out to make sure both the public benefits (it is our money, right?) and the car companies still are helped. The car companies would have a huge increase in sales which could help them become profitable, the public would get new cars, the environment would benefit from all the older cars being taken off the road, etc. Another win/win situation instead of our current plan which has citizens still paying their money for questionable quality American cars made by companies that may not be around to service them while their tax dollars go into the companies with the same failed management strategies that got them into the trouble in the first place.
This approach, providing stimulus to companies and institutions that need assistance by providing assistance to the public, would work far better than passing out checks to managers (in business or gov. agencies) that have already shown they cannot distribute funds well or manage a department profitably. It can be done everywhere and in every sector, too, including disaster relief. Billions poured into New Orleans after Katrina yet the city is a shell of its former glory, residents have no way of moving back and have to start over, crime is up... How about giving anyone who lost their home $200k towards a new one, plus $30k per person to replace possessions lost (to renters and homeowners alike). Strings attached, of course. Would there be abuses and those who spent the money on drugs by selling their vouchers to others? Sure. No system is foolproof. But not only would retail places see a boom, but contractors would as well. Want to help rebuild its standing and bring back some measure of 'normalcy' to the region? The gov. could pay 50% of travel costs and / or hotel costs for people willing to vacation there. It would bring people back to spend money in an area that lived off tourist dollars, people that currently won't / can't go back to spend money there. The economy would thrive. People would move in to provide the services to a community flush with cash. Those who lost everything could rebuild. Heck, those who helped by paying taxes could get a cheaper vacation! Everyone would benefit. Sure, the gov. would still have to rebuild schools, the levees, etc. but even with those expenditures the costs would be lower than the billions that are poured into the area, most of which have either not been handed out or have disappeared with so much of the city and so many of the former inhabitants still in a terrible position.
While not a fan of huge government, I am all for stimulating the economy at times like these rather than letting the current economy snowball as it runs downhill... This is why we have a government: NOT for when times are good and the economy is growing and threats abroad are minimal, but for when we need a push, a prod, or some protection. To be there to right wrongs that we alone cannot correct, not to run our lives all the time and make people dependent upon the government. But while I agree the government should be helping certain people and sectors, and I do not think handing out cash to people 'willy nilly' is the answer, I do think a controlled program of spending with strings and controls would be FAR better than our current way of 'helping' by handing out cash and 'loans' which barely help the public who's taxes are paying for the loans and who's children will bear much of the burden for paying them.
There is a better way and we have to start looking for it and demanding it.
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