Bailout Double Standards

CNN ran an interesting commentary this morning by Frank Micciche, managing director of the Next Social Contract Initiative, a bipartisan think tank. Micciche's basic premise is that it's easier to get billions for banks and the auto industry than to get a small grant. "Small nonprofits and community organizations that receive federal grants will tell you that the paperwork and scrutiny that comes with even the most modest federal award is often so exhaustive as to nullify the benefits of the grant," Micciche says. "Not so, apparently, if your request is in the billions."

This is why I don't support the bailout - not so much because it isn't needed, but that it would not be effectively executed. Does anybody know where the $350 billion went that Paulson gave away in TARP I (other than executive bonuses, that is)? And with Chrysler and GM asking for another $21 Billion, do we know what they did with the $17 billion they recently got?

Too much money is going too many places with too little oversight and only a hope of success. Let the banks and automakers go to bankruptcy court and use that bailout money instead for direct support of those who lost their jobs in the meltdown.

TARP I cost over $1,150 for every man, woman and child in the country (not counting interest) and nobody seems to know where it went. The Obama administration estimates that bank bailout will cost taxpayers $2.3 trillion ($7,570 per person). And Bloomberg News recently pegged the entire cost of the all bailout funds (including banks, automakers, stimulus package and mortgage rescue) at $9.7 trillion ($31,712 per person). If you have a family of five, your family's share is $158,560. As the Bloomberg article points out, that's "enough enough to pay off more than 90 percent of the nation’s home mortgages." Here is the math and links to the numbers:

TARP I $350 billion/305,878,088 = $1,150
Bank Bailout $2.3 trillion/305,878,088 (US population) = $7,570 per US citizen
Bailout Total $9.7 trillion/305,878,088 = $31,712 per US citizen
Family of 5 $31,712 * 5 = $158,560 for a family of five

An interesting question is what would happen if the government actually did use that money to pay down mortgages? That money would flow right to the banks, making them flush with cash and ready to lend again. With the mortgages paid down or, in many cases, paid off, consumers would be able to use that mortgage money to buy cars and TVs, giving a boost to manufacturers. But most important, the US taxpayers would actually get something of real value for their bailout money.

Of course, it will never happen. And the bailout would unfairly help mortgage holders over renters, who would still be on the hook for their $31K. But at least there would be tangible, predictable results.