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Can We Get a Refund on that $700 Billion?

Published 10/28/08 Craig Harrington - Print Article
E-mail - editor@economyincisis.org

The Emergency Economic Stabilization Act is looking more and more like a political farce. The bill was pushed by the Bush administration and the Democratic Congress as a means of saving our economy from the obvious foreclosure crisis. The usage and intent of the funds are now shifting further from their origin, according to The Detroit Free Press.

Critics warned from the beginning that the money would certainly be siphoned off into other areas, dampening any positive effects. The Treasury is using $250 billion to buy stakes in banks, supposedly allowing them to start making loans to needy borrowers. As it turns out much of that money - $125 billion of which is set to go out to nine large banks around the country – will be used for other purposes of the bank’s own choosing.

The strongest banks in the country are being encouraged to buy other banks. The Treasury has said that this consolidation will build stronger lenders and thus make money available to borrowers. What it seems to be doing is simply making more money available to shareholders and bank executives, who have used the money to pay stock dividends and employee bonuses.

This is not to say that shareholders do not deserve a return on their investment, they do. Or to say that average employees shouldn't receive pay increases, or even in some cases increased compensation for executives. When a company is well run and profitable it should send that money to those employees and investors who made it possible.

The only problem is, the banks didn't earn these funds through fiscal responsibility and enlightened investment. They were given the money by the government, and the government borrowed that money from abroad on a loan that will have to be paid back by our children for generations. With the U.S. so incredibly indebted to foreign financiers, we cannot afford to let our hard earned tax dollars be misused on such a grand scale.

There are far better uses for the $700 billion.

The Economic Stabilization Act contains roughly 60 times more funding than the entire budget of the United States Department of Education in fiscal year 2009. With educational achievement in this country lagging far behind most other developed countries, even a small infusion from the Treasury’s huge plan could right many injustices inherent in our system.

Our infrastructure is falling apart, highways, roads and rail lines could all use the money for much needed repairs, which would put money in the hands of lower class workers and increase internal productivity.

Our manufacturing and industrial foundation has been completely undermined, the United States is no longer the most prominent and productive nation in the world. We will soon be outproduced by a growing Chinese juggernaut, relinquishing a title that our country, in its current state, could never reclaim.

Most importantly, millions of Americans are losing their homes to foreclosure and default. The Economic Stabilization Act was sold to the public as a means of staving off foreclosure, but it has yet to delineate any method of getting the necessary funding to the millions of homeowners in dire need. For every borrower who is losing money on a calculated poor decision, there is another borrower who honestly did not know better and was encouraged to sign his or her life away by marketing gimmicks and misleading sales advertisements.

If the government must spend $700 billion on some measure to shore up this economy, why not spend it on something that will actually help the economy. If not, perhaps we should ask for a refund.

Source The Detroit Free Press:

As the crisis worsens, the government’s reaction keeps changing. Lawmakers in both parties are starting to gripe that the bailout is turning out to be far different from what the Bush administration sold to Congress.

…

In buying equity stakes in banks, the Treasury has “deviated significantly from its original course,” says Alabama Sen. Richard Shelby, the top Republican on the Senate Banking, Housing and Urban Affairs Committee. “We need to examine closely the reason for this change,” said Shelby, who opposed the bailout.

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