Instead of a $1 trillion bailout, why not give the money to us?

[Monkeyleg]

As the cost to bail out banks, automakers, credit card companies, and nearly every other business continues to grow, I'm wondering why it wouldn't be more effective to give the $1 trillion to the people who've paid it, meaning US taxpayers?

If need be, issue the money in the form of a gift certificate that must be spent on something. A $1 trillion payment to the US taxpayers would amount to about $3000 for every man, woman and child. That amount of spending on anything from golf clubs to Cadillacs would give the economy the stimulus it needs, give the hurting industries the sales they need, give banks the capital they need to extend credit, and all without having to cherry-pick the beneficiaries of government largess.

If the Big Three can't increase their auto sales with an extra $1 trillion in the pockets of consumers, then they'll never make it anyway.

That kind of infusion of discretionary income into the economy should send the stock market soaring.

As for those with mortgages in foreclosure, well, too bad. Don't take the $3000 coupon to Vegas, though.

There must be a reason why nobody's proposed this. Perhaps because it's stupid. Or maybe it makes sense?

[Headless Thompson Gunner]

Won't work.

Stimulus would mask the problem for a little while, by temporarily increasing demand.  But once the stimulus money is all spent, we'd be right back where we started, with all of the same problems.

Can government create wealth?  Can government simply imagine wealth into existence, and then distribute that wealth out amongst the population?

The answer, of course, is 'no'.  At best, all government can do is take wealth from one place and move it somewhere else. 

$3000 in all of our pockets would certainly buy us a lot of stuff.  But to get that $3000 into our pockets, government must first take away $3000 worth of valuable stuff from somewhere else in the economy.  Those golf clubs and Cadillacs we'd all spend out stimulus checks on would come at the expense of other stuff, the stuff the original owners of that wealth would have spent it on had it not been taken from them and given out as stimulus.

[Standing Wolf]

Government never gives: it takes.

[El Tejon]

Better idea:  eliminate the capital gains tax and halve Kirk's tax burden!

Money pours into the country and everyone has three jobs.

Economic Policy Police=>

[HankB]

Instead of simply giving the auto companies $25,000,000,000 - oops, I meant $38,000,000,000 - how about making the price of a new, domestically produced auto 100% tax deductable? For most people, this will be like getting a 20% or 25% discount.

If the automakers still can't sell enough cars to go into the black with this type of arrangement, then maybe they should go under, since their business model is unsustainable.

And any and all bailouts ought to include a condition that the company's current leadership - CEO, Chairman, President, CFO, and all board members - be gone, with no special severance package.

And they can't be replaced by execs from a company that filed for bankruptcy or that also received a bailout.

[MechAg94]

Does that mean I can also buy a Honda that is domestically made? 

Why not allow tax deductions for the drop in value of the car after you drive it off the lot.

[FTA84]

I agree that giving out money to people instead of to automakers probably won't work.  The automakers bailout it some sort of wage readjustment, basically saying, 'if the auto industry goes under every business in America will be affected'.  Therefore, if you give some of your wages to the government (i.e. a pay cut) then you will get to keep your job.  Which all makes sense, since we have massive deflation in oil and housing prices, shouldn't it only be normal that wages take the same hit?

Now, on the otherhand, the housing problem I felt could have been fixed by "giving" money to homeowners.  After all, it was some overrated and illpackaged housing loans that gave the financial sector the heebeejeebees.  Why not reduce taxes (or make house payments some sort of a deduction)?  That would stabalize and bring up the loans up to their supposed rating.  Then, fix the rating system.

But that will never happen.  Congress bails its friends out, not the serfs.

[MechAg94]

I'd rather see them not take it in the first place.  Remember, they will be taking it from you and your children in the future.

[Northwoods]

I'd rather see them not take it in the first place.  Remember, they will be taking it from you and your children in the future.

+1. 

I'd just as soon they didn't borrow the money in the first place.

Now, if they'd cut spending in order to do something like this I might be in favor.  Especially if those spending cuts came in the form of abolished agencies like the BATFE, DOE (both of them), HUD, IRS,  etc.

[Monkeyleg]

Ah, well. It was a thought. The idea of giving enormous amounts of money to poorly-run businesses galls me. It galls me, too, to have my tax dollars help bail out the pensions and benefits of assembly line workers who make two to three times as much as I do.

[FTA84]

..... to have my tax dollars help bail out the pensions and benefits of assembly line workers who make two to three times as much as I do.

Guess my mom was right.  Life isn't fair.

[Headless Thompson Gunner]

I agree that giving out money to people instead of to automakers probably won't work.  The automakers bailout it some sort of wage readjustment, basically saying, 'if the auto industry goes under every business in America will be affected'.  Therefore, if you give some of your wages to the government (i.e. a pay cut) then you will get to keep your job.  Which all makes sense, since we have massive deflation in oil and housing prices, shouldn't it only be normal that wages take the same hit?

Now, on the otherhand, the housing problem I felt could have been fixed by "giving" money to homeowners.  After all, it was some overrated and illpackaged housing loans that gave the financial sector the heebeejeebees.  Why not reduce taxes (or make house payments some sort of a deduction)?  That would stabalize and bring up the loans up to their supposed rating.  Then, fix the rating system.

But that will never happen.  Congress bails its friends out, not the serfs.

You're right about the deflation thing.  Wages probably will come down along with everything else, before this is all over.  With unemployment rising, competition for jobs will likely increase, thus driving down wages.  Of course, the government might step in and try to prop up wages somehow, which would only make matters worse.

House prices need to come down too.  Real estate is an overpriced asset class just like stocks and commodities.  Heck, real estate is even more overpriced than most other assets.  But for some reason people want the government to pump money into housing, to prop up prices.  Well, it was just that sort of government meddling in housing and mortgages that created the housing bubble in the first place.  You don't put out a fire by throwing more wood on.

By the way, house payments already are a tax deduction.  Mortgage interest is usually deductible.

[Headless Thompson Gunner]

..... to have my tax dollars help bail out the pensions and benefits of assembly line workers who make two to three times as much as I do.

Guess my mom was right.  Life isn't fair.

Pension promises or not, it's hard to generate sympathy for anyone who made six figures most of his life and still didn't build up a nest egg for his own retirement.  That's doubly true given the fact that people have seen these pension problems coming for decades.  Anyone who didn't prepare for them deserves what's coming.

[Monkeyleg]

"Life isn't fair."

This isn't a question of fairness. It's a question of whether taxpayers should bail out workers who make six figures putting a bolt on a widget, especially those taxpayers who don't make anywhere near that kind of money.

That sentiment must be awfully prevalent, because even the Democrat leadership is giving the bailout idea a rough ride, which can't make the UAW very happy.

[FTA84]

My life isn't fair comment was direct at us:  The people who make a free market wage for our skills and save for our future, but have to bleed money (via taxes) for those people who don't.  Even when those people are given great advantages (and overpaying job, a good home, rich parents, ect.).

[gunsmith]

I'd rather see them not take it in the first place.  Remember, they will be taking it from you and your children in the future.

A No kids
B
No future

[Monkeyleg]

Sorry for the misunderstanding, FTA84.

[Gewehr98]

The sense of entitlement from UAW members is staggering.  My wife called me and told me to open the link to this CNN report:

http://www.cnn.com/2008/US/12/02/students.auto.industry/index.html#cnnSTCText

ANN ARBOR, Michigan (UWIRE) -- Amanda Emery, a junior at the University of Michigan-Flint, was born and raised in a General Motors family.

Her parents both logged more than 30 years on the job for the automotive giant -- her mother, Cathy, as a skilled welder in a Flint, Michigan, truck plant and her father, Gary, as a company electrician and supervisor.

Her uncle worked on the assembly line in a GM plant in Flint, and a cousin works on the assembly line at the same Flint factory.

Now retired from GM, Emery's parents live off their company retirement packages, which include monthly income and health insurance for them and their children, among other benefits.

"Basically, you're talking about people that are assured that they're getting their retirement money," she said. "They've worked for it for 30 years; they're thinking their money is safe."

But with GM burning through its cash reserves and teetering on the edge of bankruptcy, the Emery family is facing the possibility that GM veterans Cathy and Gary could soon lose most of their income.

That would leave 29-year-old Emery, a journalism and photography double major, with the responsibility of helping support her family, assisting her mother to make payments for not only her own house but Amanda's grandfather's home in Kentucky and providing some form of health care for Amanda's aging parents. Her father would be able to pick up work somewhere, but her mother would not.

"Somebody would have to pick up the slack, and I'd have to figure something out," she said. "I would have to drop down from [studying] full-time to part-time because I'd have to work more -- for sure."

With executives from the Big Three automakers rebuffed in their attempt to obtain critical rescue loans from the federal government, the crisis engulfing the American auto industry has deepened, and its effects can be felt throughout Michigan as more plants shut down and workers lose their jobs.

And what about the impact on students? For them, the future looks increasingly uncertain, with parents subject to layoffs, tuition assistance and scholarship programs getting cut, and an already weakened work force set to lose even more jobs should the auto industry falter even more.

We spoke to more than a half-dozen students whose parents work for one of the Big Three who said they feared for their parents' jobs as automakers continue to trim jobs to stay afloat.

For Dmitry Vodopyanov, 21, a senior at the University of Michigan-Ann Arbor, each week that goes by holds another chance his father, a Chrysler engineer, could lose his job without any warning.

And what makes the situation even more uncertain, Vodopyanov added, is that his father relies almost entirely on the media to learn about the latest updates on Chrysler's future.

"He's always worried about it," Vodopyanov said. "And if he's stressed, then I'm stressed."

Looking to cut costs, the Big Three have thrown numerous company benefits on the chopping block this year. Among them are tuition assistance programs, which provide employees with money for continuing education classes and degrees.

At the end of October, Chrysler suspended its tuition assistance program for active and laid-off unionized employees. General Motors announced around the same time that it was canceling a similar program for salaried workers by the end of this year. And in June, Ford Motor Company announced that it was suspending its own tuition assistance program for salaried workers.

Each of the Big Three has also said it will suspend dependent scholarship programs, in which dependents of employees received scholarships to help pay tuition costs.

Jerry Glasco, the director of financial services and budget at UM-Flint, said just over 200 students at the university use GM scholarships to pay for tuition.

But with GM suspending the program soon, Glasco said, students who rely on the scholarships to cover most, if not all, of their college expenses could have trouble staying in school because they can't pay their tuition.

"If that program goes away, it's certainly more difficult for those students to pursue their degrees," Glasco said.

Even students finishing up their degrees and aiming for a career in the auto industry will face their own challenges.

According to a recent report from the Center for Automotive Research in Ann Arbor, nearly 3 million auto industry-related jobs could be lost in a single year if the Big Three companies stop all operations.

Jake Obradovich, 21, a senior at Kettering University in Flint, a science and technology school where students alternate between taking classes and working full-time jobs related to their degree, said that about a year ago, he was still considering the Big Three companies as job possibilities after graduation.

"Obviously, with the way things have gone in the past six to eight months, my desire to get a job with one of the Big Three has now really decreased," he said.

Ultimately, it's the day-to-day uncertainty and mounting stress that seem to weigh most on students -- and especially those, like Amanda Emery, who come from families with lifelong connections to the American auto industry.

Her cousin recently purchased a house, Emery said. But now, with the threat that he could lose his job for good, Emery said she's concerned for him having to make payments on the new house.

"It hits me directly with, you know, my mom and my dad and my family," she said. "I worry about the future."

WTF, over?  She's a 29 year-old double major, and she's concerned that her college may not be paid for via Daddy's UAW pension? 

Oy, veh!   

[Rudy Kohn]

Emery, FAFSA.

FAFSA, Emery.

There, done.

[Nick1911]

Counting on a company pension plan for your retirement seems very foolhardy.  You're putting your future in the hands of a company, instead of your own hands.

[Gewehr98]

Nick, I'd somewhat agree, but there's always a rub.

I'm a retired military pensioner, and Uncle Sam pays me a nice sum each month.

Of course, if they're busy bailing out banks and automakers, and can't stem the bleeding, what happens to my little nest egg?

Granted, I've got a McJob on the side, but still...

[Headless Thompson Gunner]

I wouldn't call a pension a nest egg.  'Nest egg' means savings, and a pension isn't a form of savings.  A pension is a promise of future payments.  Any promise is only as good as the person who made it.

[Gewehr98]

And if Uncle Sam can't pay my piddling pension, we'll probably be (not you and me, but the FedGov and current American way of life) in very deep doo-doo, IMHO.

Think Social Security (which I don't see even existing when I turn 65), Medicare/Medicaid, you name it.  The bailouts would be the least of our worries at that point.

[edited: my pension may be more than some people's full-time jobs - somewhat thoughtless of me...]

[taurusowner]

If they're giving our money away in the first place, why not just not take it from us in the first place, and let us spend it and build the economy?

Oh wait, because lowering taxes as opposed to stimulus checks and bailouts takes the .gov hands and pockets out of the money trail.

[lupinus]

WTF, over?  She's a 29 year-old double major, and she's concerned that her college may not be paid for via Daddy's UAW pension?

Did daddy pay his dues for 30 years to get it up the rear end now that it's his time to collect?  It's not a sense of entitlement if you payed for something.

I'm about as anti union/anti pension as someone can get.  I think that unions everywhere but perhaps mining, are stupid.  I think that pension plans are downright retarded.  However, I have a hard time faulting people for wanting their pension when that is what they paid for while they worked.  30-40 years from now when I retire will it be a sense of entitlement for me to expect my 401k that I put money into while I worked?

Pensions are an extremely stupid option IMO, but if thats what a company offers and thats what you paid for your entire working life, it's not entitlement to expect it.