Moral Bailout

The last couple of months brought us lots of change. Some good, some not so good. But the biggest change of the new administration is just now being spent- an unprecedented $787 billion of spending.

But let’s backtrack a bit and see what brought us into this current state of affairs.

1. Bush stimulus package – $168,000,000,000
2. Bank bailout – $350,000,000,000 (another $350 billion to go after further Congressional approval)
3. Automaker bailout – $17,400,000,000 in loans
4. Obama stimulus package – $787,000,000,000

Grand total: $1,322,400,000,000

Likely Forthcoming Additional Spending:

• Mortgage Bailouts (unknown)
• Automaker Bailouts Round 2 – $21,000,000,000 in loans
• Bank bailout Round 2 (unknown)
• Omnibus Spending Bill – $410,000,000,000
• Healthcare reform – $630,000,000,000

Estimated Total: Who knows?

With an estimated US population of 303,824,640 as of July, that means an average of $4352 will be spent or loaned out for every man, woman, and child in this country.

And this doesn’t count the second half of the bank bailout, any of the forthcoming spending announced in the President’s State of the Union address, the interest on any of the spending, or any additional bailouts that corporations are lining up to ask Congress to provide. Did I mention that repaying the interest on the debt from President Obama is estimated to bring the total cost to well over $1 trillion for that package alone? And although it is small change by the rest of the figures, remember that the U.S. government effectively took over insurance giant AIG with an $85 billion dollar loan in September.

If, in the first month of his administration, President Obama can spend a trillion dollars we don’t have on hand how much further will this go? And more to the point, why have we let this become so commonplace? This recent spate of spending started under Bush and we barely noticed. It continues under Obama and and somehow the shame of the government Somewhere along the way we have grown accustomed to the idea that failure and responsibility aren’t necessary any more. If we don’t have failures to learn from where will most people ever learn morals from? (In case you’re wondering, I don’t think we can count on the majority of Americans learning their morals from the Bible any more and learning fiscal policy from Proverbs is just right out.) If we don’t have fiscal responsibility in Washington, why would we be expected to maintain it in our families?

At this point, I think we could do with a different kind of bailout: a moral bailout.

Transparency

President Obama promised a transparent administration and an end to Congressional ear-marks. Let’s see that he sticks to that promise. One way to do this is through the various websites tracking the progress of this latest stimulus package (http://www.stimuluswatch.org is one such site, more will no doubt follow).

Keeping track of who is appointed where, who receives what tax breaks, which regulations punish which industries, and who stands to profit from the administration’s agenda will not be an easy task but preventing graft and cronyism is essential to retaining any sense of transparency in the White House.

Moral Uprightness

Closing Guantanamo Bay in his first week in office, was put forth as an example of correcting the moral lapses of the previous administration. While we can debate the wisdom of ordering the closure of a detainment center before knowing what will happen with the detainees, getting the detainees to face military tribunals is probably something that should have happened sooner.

But this was an easy target – with his home state’s governor under impeachment, with overwhelming party majorities in Congress, and with a ambitious agenda, many opportunities exist for favors to paid back with appointments, money to be pushed to supporting political organizations, and industries populated by political allies to be favored over what would be appropriate in a free market.

At last count the number of cabinet nominees with tax issues was up to 4. Certainly easier to raise taxes on the rich if you aren’t paying them! And former Governor Gary Locke of Washington state is the third Commerce Secretary nominee. If you are tired of reading about bailouts, you may want to research the political contributions Locke originating in China may have received. Not terribly encouraging for an administration that was supposed to recapture the moral high ground. The best I can say at the moment is that so far the moral leadership is unproven with room to go in either direction.

Fiscal Leadership

Back to where I started this post – spending money we don’t have on things we don’t need.  Any moral bailout will have to include fiscal leadership. President Obama didn’t campaign on any platform of conservatism and, unfortunately, that included fiscal conservatism. Continued policies of rewarding failure with monetary bailouts and loans (automakers and banks) and not allowing those that exceeded the limits of commonsense (mortgagees with loans they knew they couldn’t afford) to actually go bankrupt and learn their lessons doesn’t set any kind of example for the rest of America. If one can attempt to make money at anything without risk,  why not try it?

One simple opportunity for a needed example is the auto industry. Isn’t time that we held automakers responsible for poor planning and decision-making and held the UAW partially responsible for helping drive the automakers into insolvency? If we need examples to teach fiscal stewardship maybe an example of poor stewardship driving America’s industrial icons into bankruptcy would get us rethinking our personal finances.

In summary, it’s time that we got the bailout we need – not a stimulus package, not a loan, not a monetary bailout, but a moral bailout. But the only thing that we’ve received was so far was a measly $600 dollar rebate check. Will Obama be the leader we need during a recession or can we expect only more rebate checks as his agenda moves forward?