The Bailout Part 2: The Future

Late last night the Senate pushed the new stimulus bill through less than 24 hours after it was originally printed and less than 12 hours after it was passed through the House. In Part 2 I will discuss what this bill will mean for our future when President Obama signs it into law next week.
The first stimulus package, the one to bailout the banks, was $750 billion dollars, and throwing more money at the problem now is going to have the exact same effect, nothing. The national debt will soon be $10.7 trillion which amounts to $36,000 per person in the US and the interest alone on that much money will be over $500 billion a year. That makes interest on our national debt our fourth largest federal expenditure only behind Medicare, Social Security, and defense. Which means that interest is crowding out national spending, and if by some crazy chance we eventually have a federal surplus all of that money will go towards trying to dwindle down our national debt. How would we ever get a federal surplus? Well it would require probably a combination of two things, higher taxes and a cutback of government spending, borrowing, and programs that we are increasing right now. It doesn’t make much sense to me to decrease taxes and increase spending and borrowing if we are just going to have to do the exact opposite years down the road. We should just let capitalism run its course unless we are planning on continuing this reckless spending until we just can’t get away with it anymore. Instead we are setting a high benchmark for all of these government services (handouts) and when we try and reduce those there will be even more public outcry from advocates of the unemployed and people below the poverty line. This increased spending on government programs is just perpetuating poverty and spreading the message that it is okay not to be a contributing member of society and just live off the government. Don’t get me wrong, legitimate injury and disability benefits are an excellent idea, but when people can claim disability because they have a drug problem is just too much for me. The spending on infrastructure is only a fraction of what our infrastructure needs, and the money going to police only half of it is going towards worthwhile programs such as hiring of new officers. The other half is going to programs that have failed in the past instead of going to the officers in Phoenix, AZ, and all along the southern border who desperately need rifles and new equipment. They need this equipment because of the influx of illegal immigrants and drug trafficking coming in from Mexico. These traffickers have more firepower than the police down there and Mexico is in such a dire state politically, militarily, and economically that there is a very real chance the whole country could collapse. If that were to happen there would be a huge wave of people attempting to flee into the states near the border, namely California, Arizona, New Mexico, and Texas. The police forces of these states are ill-equipped to combat any of this, and just add to that the fact that Phoenix has the second highest child kidnapping rate in the world right behind Mexico City.
Not only will future taxpayers have to repay our borrowed money to China, Britain, or Japan, but if the government decides they are also going to print money to provide for some of this spending there is a very real chance inflation could go out of control. This concept of Big Government cannot fix Wall Street or the economy by just throwing money at it. California has the eighth largest economy in the world and yet has one of the worse unemployment rates and the worst economic problems of anyone. If California fails the rest of the US is sure to follow. It is time for them to balance their budget, and fix their unions and education system problems. It baffles me how a state with the eighth largest economy in the world can have such a terrible education system and some of the worse schools. The Europeanization of America is not what we were built on, and Socialism is what we have opposed throughout time but for some reason is exactly what we are moving towards now even though our system directly beat that system in the Cold War.

I can’t do all this ranting without offering a few alternate solutions. For starters, what if we just let business fail and let capitalism run its course? There are other companies there to pick up the slack, and those companies are the ones who are doing things right and it simply becomes a process of weeding out the companies or management who do not know what they are doing. What if we drilled for oil off the coast or in Alaska? The environmentalists really have nothing to worry about because new technology allows us to leave a minimal footprint on places where we do drill. Other advantages include less dependency on foreign oil, lower fuel prices, more jobs for the construction and operation of the new facilities, infrastructure, and equipment needed. Last but not least, the accounting world has the General Accept Accounting Principles (GAAP) that require them to follow certain guidelines or face penalties of jail time and/or fines. What if the banks and other lending institutions were required to adhere to similar rules and regulations and audits? This would create a whole new industry of loan auditors and a very practical way to make sure that loans were being given out in the right way to prevent the same banking and mortgage collapse again.