Tuesday, January 13, 2009
$2300 is an estimate tossed around lately of what it will cost each taxpayer for the $700 billion bailout of the U.S. banking system. And by most accounts the $700 billion is shaping up to be a modest estimate.
Surely we can all pull up our bootstraps, tighten our belts, and scrape together a mere $2300 apiece, can’t we? For the good of the financial system? For the good of the nation?
But wait. Economists are now saying that if you add the $700 billion bill to our already-bloated deficit, you actually get a $10 trillion total price tag of U.S. debt--for a war we placed on a charge-card, for all the government owes on Medicaid, Social Security, etc., etc. Which means that each one of us actually owes about $34,000 instead of $2300.1
And all this time we at Tired of Being Poor thought we were living within our means. . . .
So how will this debt be paid for? Rest assured that a federal tax collector won’t come knocking on your door requesting $34,000 in funds due. Maybe, but not likely. Although it would be nice if some fed bookkeeper sent each one of us an itemized account of how we’ll be paying for this bailout--namely, a list of cuts to the already-dwindling services we enjoy, and a list of hikes in the fees that we hate.
In other words, we all need to see an itemization of how each one of us will be paying MORE for LESS.
What will be cut? Will there be less tax benefits? Less grants for higher education? Less unemployment benefits? Cuts to Medicaid, gutting of Social Security and pensions? Should we not only expect less sums of money from these programs, but reconfigurations of them that would decrease who’s eligible?
Add the cuts to the hikes: Will there be more statewide tuition hikes at universities (i.e., as states cut support to schools even more)? Of course there will be. Hikes in interest rates for federal unsubsidized Stafford loans? Fewer subsidized Stafford loans? Hikes in sales tax and income tax? If your state doesn’t do so already, will it decide to tax the food and clothing you purchase?
Maybe we should change our name to Tired of Paying to Continue Being Poor.
In at least eight years, we have seen a steady divestment in the services like the ones above rendered us by our government.2 Now we’re being ordered to bail out the financial system and our government (for its bad check-writing) in historic proportions. Fine, dandy.
But for such a historic investment will we be guaranteed, strangely, nothing in return? And by that I mean something better than an unstable financial system that will continue to be unstable, and something better than government decision-makers who keep making such bad decisions with our money and future?
Smart investments should yield good returns, right? But our $34,000-apiece investment will not yield returns for us unless we make our government realize that investment in its people--and not divestment--creates the returns.
Do we now have an administration that's more likely to understand this concept? Ask for yourself.
See “The $10 trillion hangover: Paying the price for eight years of Bush.” By Joseph E. Stiglitz and Linda J. Bilmes, Harpers’s Magazine, January 2009.
See divestments made under Bush and under Clinton.
Tired of Paying to Continue Being Poor
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