GPMI Statement on the Bi-partisan Bailout
proposed by Art Myatt, Jan. 17, 2009

The federal government's economic bailout tab to date (mid-January of 2009) totals $7.2 trillion. It's a hard to follow complex of giveaways (the Troubled Asset Relief Program, or TARP), loans (to the auto companies, for example), tax rebates (Remember your stimulus check in 2008?), Federal Reserve guarantees for money market funds and some commercial paper), guarantees for the mortgages provided by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), and so on.

The figure given above is an estimate, not a precise number. The total cost is a moving target in any case. Obama's economic stimulus plan is expected to cost another $800 billion, which will bring the total to roughly $8 trillion - $8 trillion and counting in one year. That is approximately $27,000 for each inhabitant of the United States, or a debt of more than $100,000 for a family of four, in one year of economic crisis.

The median annual household income in the United States was about $50,000 in 2007. If the depression continues to get worse, the median income may be less in 2009. If a family making $50,000 a year ran up additional debts of $100,000 in a year, we would suspect them of being financially stupid or reckless or both. That is exactly the level of debt that is being run up for us by broad bi-partisan agreement, also known as the two-party system. We suspect our Democratic and Republican elected officials are stupid or reckless or both.

All this debt is supposed to bring about an economic recovery. It is not working.

This is not an opinion, it is an observation. "Confidence" of financial institutions in other financial institutions has not been restored by the actions of the government. Consumer and business loans are scarce, even for people and companies with good credit histories. Housing prices are still declining. The unemployment rate is rising, and so on. The economic news is generally grim.

According to law and custom, what ought to happen with bankrupt, insolvent institutions is that they fail and formally declare bankruptcy. What is happening instead is that the government is spending trillions of dollars to recapitalize bankrupt banks. Saving companies that are insolvent by loaning them billions of dollars they will never be able to repay will not lead to economic recovery.

The government could and should stop its efforts to stimulate the economy from the top down. What this does is preserve business that have failed. It rewards the people and institutions that are responsible for creating the crisis. it does not help the millions of ordinary people who are losing their jobs, their houses, and all else that can be lost.

The government should instead be committed to preserving a minimum standard of living for all the people affected by business failures. This would mean instituting Medicare for everyone (universal health care), Social Security for everyone (a guaranteed minimum income sufficient to cover food and shelter) and maintenance of essential infrastructure and services.

This would support the economy from the bottom up. It would allow a sustainable economy to emerge from the wreckage of all the unsustainable institutions and practices that have caused to the current crisis. It would allow obsolete institutions to disappear without destroying the lives of the associated people.