$700
Billion Bailout: Let’s Do
Some Simple Arithmetic
By Michael Dickel
27 September,
2008
Countercurrents.org
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?
