Billion Bailout: Let’s Do
Some Simple Arithmetic
By Michael Dickel
As economists and politicians like to say, let’s do the numbers. The Bush-Cheney administration proposes a $700 billion bailout plan for Wall Street. For a moment, let’s forget the invitation to larceny provided by the lack of oversight in the plan. What do we expect? Haliburton likely will get the contract, given past precedent for highly funded government spending with little oversight in the Bush-Cheney administration.
Instead, let’s look more carefully at some basic arithmetic. According to the CIA World Fact Book the estimated population of the US for July 2008 is 303,824,640 people. That’s everybody: adults and children. The population over the age of 15 is 272,567,532. So, here’s the arithmetic: $700 billion bail out divided by 272,567,532 people 15 and over equals $2,568.17 (and a tiny fraction).
Pause a moment to let that sink in. The Bush-Cheney-Haliburton administration proposes to hand over to Wall Street over twenty-five hundred dollars for each person over the age of 14 in the U.S. That’s over $10,000 for a family of four where the children are teen-agers. Do you know many families of four, with two teens, who can cough up $10,000 to help bail out Wall Street?
At the risk of sounding like a Republican, that’s our money, not the government’s. If the government borrows the money, we pay for the interest, too. Of course, they claim that there is a “chance” of gaining some return on this bailout money. We’ve seen how reliable market investment “returns” can be. The government wants to gamble with your money.
I propose another plan: Give each person aged 15 or over an IRA account of $2,500. Let them invest the money as with any 401(k) or IRA into stocks, bonds, treasury notes, certificates of deposit, or even a savings account. It will cost about the same.
Investment in short-term trading funds should be limited to less than ten percent of the $2,500, with long-term investment funds limited as well to twenty percent, to limit incentives to show short-term profits by trading gambles. These new IRAs should limit changes in position to once every three years for mutual funds and once every year for direct ownership, thus further limiting gambling in the form of short-term profiteering, what is called “trading.”
U.S. citizens will increase direct ownership in companies, and given the fact that the IRA would be a long-term investment for most of the population, these new owners will have an interest in limiting short-term greed in favor of long-term returns. That is, investment will replace trading. Investment requires a long view, sustainability, and practices that stabilize markets, as opposed to the short view of trading for immediate profits.
As a result of long-term investment, oversight will be dispersed—over 270 million individuals will decide which investments deserve the funds. The influx of investment will prop up Wall Street; the increase in direct ownership with a long-term interest will provide better oversight. Citizen-owners might even be encouraged to set up oversight groups in order to pool proxy votes and gain larger influence in the boardrooms.
The additional retirement funds might help with the Social Security problem. Remember how the Republicans used to complain that Social Security debt would ruin the country?
If we are going to be asked, as taxpayers, to pay more than twenty-five hundred dollars per individual over the age of 14, then at least give us the money to let us choose how to spend it, and let us profit directly from the returns. Isn’t this the logic behind the school voucher arguments? Behind the Bush-Cheney tax reductions for the rich? Behind the incumbent voter bribe, er, economic stimulus package of last summer? Trust the consumers. Let the market play out. Or does that only work until you need to repay your rich, greedy buddies for all of the favors they’ve given you and your family, Mr. Bush?