Burden Of Bail-out Already On Main Street
Letter to the Editor:
Yesterday I shared some personal views with email friends concerning the credit, mortgage and financial dilemma confronting us. Those views are repeated, in part, in this letter. In sharing these observations I recognize that some will not agree with my views, and I certainly respect views that are not consistent with my own.
First, I’m as outraged as anyone about the economic chaos we are enduring, and I share the prevailing view that every effort should be made to deny “golden parachutes” to CEOs who led us into this mess. Indeed, I support any feasible means of punishing greedy (possibly dishonest) actions of CEOs of failed companies as well as government oversight officials whose actions have been imprudent.
I’m almost as outraged that people cannot see that the rescue package that failed in the US House of Representatives this week was not just a bail-out of Wall Street “fat cats” but was, in fact, a rescue package for everyone who (1) has a 401k, an IRA or another retirement portfolio, or (2) needs to maintain employment for a number of years in order to fund adequate retirement income. Social Security, assuming a way is found to perpetuate it, will not provide sufficient retirement income for families.
When credit is unavailable – and it is generally frozen now — business profits suffer (at a minimum) or losses ensue (more likely). When this occurs, business movement to offshore locations is expedited, jobs are lost and values of 401ks and IRAs diminish.
Contrary to what appears to be the view of many citizens, the burden of a rescue package is ALREADY on “Main Street,” meaning the burden will be borne by you and me, whether or not there is a rescue package. The only question is how we play the hand we have been dealt to minimize the burden. It may be years before retirement portfolios recover from the effects of the economic crisis we are in – a crisis which I believe to be significantly exacerbated by the failure of the US House of Representatives to approve a rescue package. Senator McCain reported today that Sonic has been advised by its lender, GE Capital, that credit for construction and renovations will no longer be extended. I hope that credit freeze will not affect the local Sonic rebuilding process, but the GE decision certainly illustrates that a rescue package is not just a bail-out for Wall Street.
There has been considerable political posturing to blame the failure of the bill on the “other party.” And, in my opinion, there is plenty of blame to be shared. I have my own views about where most of the blame should be assigned, but it serves no useful purpose to be a player in the “blame game.” I’m not smart enough to know whether the package which was under consideration in the House was the best package that could have been considered. I don’t even know for sure that a package of any kind should be approved. I do believe very strongly — in spite of my market orientation and capitalistic leanings — that we are confronted with a unique crisis that could be partially mitigated by appropriate, measured government intervention. I know that $700 billion may not sound “measured,” to some, but remedies must be evaluated in light of the problems they are intended to address and in view of the administrative safeguards included.
I think it is remarkable that so many members of Congress favored passage of the rescue package that failed this week, given the percentage of their constituents who expressed opposition to the package. It takes a member with real “country-first” resolve to cast a vote that is counter to the majority view of his or her constituents; it takes a member who understands the probable consequences of failure to intervene; and one who acts on that understanding despite the short-term ire of constituents.
I had communicated my views to the Tennessee Congressional delegation prior to the House vote. I’m hoping that Congress will yet sort out differences and shape a workable package that will win majority support, and I intend to communicate this view as well. Whether or not Herald readers agree with my views on this enormously important issue, I encourage them to make their wishes known to their Congressional delegation.