I don't think Congress giving Secretary of Treasury Henry Paulson $700 billion to dole out to his pals and their campaign contributors is going to work, because the day the U.S. House rejected the first bailout package, the stock market dropped 777 points wiping out a trillion dollars in earnings. The loss demonstrates how much the U.S. economy dwarfs the federal government and suggests the feds' top down approach to restoring financial stability may fail.
The latest bailout is even worse, a boondoggle that now includes $110 billion in bribes added by proponents to buy their way to a majority vote. Some of those additions have merit, but they are just icing spread over a rancid cake of corporate welfare that does nothing but allow Wall Street executives and their Capitol Hill puppets to (temporarily) escape the consequences of their stupidity, greed and incompetence.
There is a better way to fix the mess corporate America and their congressional cronies have made and help Main Street in the process. It's cheaper, too, because it would cost only $85 billion and be popular with the American people because it would put a fortune in their pockets.
My wife, Melony, recently received an e-mail about what the author calls the “We Deserve It Divided.” The e-mail advocates taking $85 billion - the amount the government loaned AIG - and dividing it among all adult Americans. There are 300 million people in this country and the author of the e-mail estimates that 200 million of those are 18 and older. Dividing the $85 billion equally between them would give each adult American $425,000.
This would not be a gift - you'd have to pay federal taxes on it. The e-mail's author estimates this at 30 percent or $127,500, immediately returning $25.5 billion to the federal treasury. This is in stark contrast to Paulson's $700 billion bailout package which the feds will get back somewhere over the rainbow.
Every adult American would wind up with $297,500 or, in the case of married couples like Melony and me, $595,000. The e-mail states that with such funds at their disposal the American people could pay off their mortgages, thus ending the housing crisis.
The dividend could also be used to repay college loans or put away money for college; make purchases and/or investments that would create new jobs and promote economic growth; pay for medical insurance.
I love the idea because we'd get three checks at my house - our daughter, Elise, would also be eligible - totaling $892,500 after taxes. It would take a fraction of that to pay off our mortgage and other debts. We'd use the rest to make some needed improvements to our house and driveway; put some money aside for retirement; and allow Melony and me to take a much-needed vacation.
The We Deserve It Dividend may sound farfetched but it's less farfetched than what Bush, Paulson and their allies are proposing and less costly to boot. It solves the problem they've created and helps out the American people rather than just Paulson's golden parachute pals and the foreign bankers they're in hock to.
Bush, Paulson and the rest would no doubt reject the $85 billion solution, but they shouldn't because they'd also receive a check. True, $279,500 probably doesn't seem like a lot to an oil man from old money like Bush and a former Wall Street CEO with a multi-million dollar severance package like Paulson, but I'm sure they wouldn't refuse it, especially if they understood what comes with it.
The $85 billion solution would help Washington and Wall Street regain the trust and loyalty of the American people and gain legitimacy. Washington and Wall Street have lost that, but they can get it back and help solve the crisis they created just by writing the American people - and themselves - an $85 billion check.
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Charles Warner can be reached by phone at 427-1234, extension 18 or by e-mail at cwarner@uniondailytimes.com
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