I am so sick right now. I honestly believe that everyone in Washington is smoking crack!
First off, our government has already provided $300 billion dollars to “bail out” companies. Since then our government has also approved an additional $700 billion dollars to bailout other sectors of our economy. Some also believe that this number is a minimum and will go up.
Accepting this, I decided to see how much this would cost each tax payer. Below is my findings. Basically, it says that the average per taxpayer will be $439 per year for the next 30 years. They base their numbers on a few acceptable assumptions. I quote,
".. if the money is borrowed by the US using 30-year Treasury bonds, and if the interest rate is the 4.13% rate for 30-yr bonds todayand if taxpayers are burdened to the same degree that they currently pay taxes...The annual cost per average taxpayer is $439"
I can probably live with $850 in additional taxes per year, if it saves the economy, my job, and everyone’s jobs.
The entire basis behind bailing out wall street and the banks was that it will save jobs and eventually trickle down to us little people. I remember learning about the trickle down effect and I am sure it works. However, I couldn’t help but think about the last rebate checks all taxpayers got from Uncle George. It was based on a trickle up effect. Every taxpayer got $600 plus a little more for children. This was done to prevent a recession. I am guessing it didn’t work since we are here today. But, I needed to check.
In 2008 we all got those awesome checks. Here is what one source said was the effects.
“The economic stimulus is about 1% of GDP, which advocates say is large enough to impact the $13 trillion economy. Most economists agree that tax rebates will immediately lift consumer spending, especially if aimed at low-income families who are more likely to spend it than save it. For example, the 2001 rebate checks increased total consumption by 0.8% in the quarter that the checks were received and 0.6% in the subsequent quarter…
According to estimates by Economy.com, each rebate dollar spent will generate $1.19 in additional GDP, while reductions in tax rates produced only 59 cents additional GDP per dollar spent. (Source: IHT, Bush calls for $145 billion stimulus package for economy, January 18, 2008)”
So, it sounds like the trickle up worked, even if it was just a little. About two weeks ago I was watching the news, CNN Headline news to be exact. I heard something that really shocked me. Below is a transcript.
“KAYE: But we did! The Federal Reserve says the average family in the U.S. is nearly $80,000 in debt, including mortgages. That's about $2 trillion nationwide. And consumers are saving less than ever. In the last four years, you've saved less than one percent of your income!”
What really jumped out at me was the $2 trillion dollars in total debt and an average of $80,000 in debt per family, including mortgages. If my math is correct, then $1 trillion is half of our national personal debt or about $40,000 per family. Can you see where I am going here?
I probably should have stated this earlier, but I am a gun loving religion clinging republican. I believe that our country and government were created by honorable me that received Divine Inspiration. I honestly believe that they are all rolling over in their graves at where our country is today. Finally, I don’t believe that the government should be bailing out anyone, unless they are physically or mentally unable to support themselves.
However, if we are going to spend $1 trillion dollars on a bailout, why not give that money to the people? That would wipe out half of the national average family debt. Not bad for the people and using the numbers from useconomy.about.com, that would result in about $1.19 trillion dollars in additional GDP, based on the results of the last round of rebate checks. Sounds pretty good too.
$40,000 per family would probably prevent a number of families from facing foreclosures and losing their homes. That is a good thing, right? Also, those families would be paying their mortgages on time, and that would be a good thing for the banks who are in trouble. Many families with high risk loans would be able to refinance to loans that are actually within their means, using the $40,000 to pay down their existing mortgages. That way we won’t have this problem again in a few years.
I also have to believe that a number of people would go out and purchase new cars. That would be good because we are already hearing rumors of having to bail out the auto industry.
In conclusion, I know that many people say the existing bail out package may not cost us anything and possible the taxpayers/government may make money on this deal. If you believe that I have some beautiful ocean front property you should see in Arizona.
I believe that we really need to start asking some questions of our elected officials. Namely, if the last rounds of rebates worked so well, why don’t we do it again this time?