In any loan, the lender demands to know the use of proceeds. It is beginning to appear that we, the people, aren’t getting even that from the use of our money in the bailout.
The Times’ editorial this morning complains that banks may use the bailout funds to buy other banks. NPR’s Planet Money last week reported on fine print that would allow the banks to use the funds to pay dividends to shareholders (there’s some Talmudic debate on that) or buy back stock, only enriching the owners. I heard on local New York TV yesterday — for what it’s worth — that the bailout means “good news” for Wall Street employees: higher bonuses. The strictures being put on banks are merely lipstick-on-pig limitations on executive pay. BFD. They should be explicit requirements on the use of funds.
As Planet Money’s Adam Davidson said, my blood is boiling.
Now we have GM trying to remake itself into a bank to get a piece of the bailout bonanza.
First, our money should be used to shore up credit and confidence and we should be demanding that a condition of getting a penny.
Second, if you want to bail out GM and other companies, I’ll give you a new idea: Take over their health insurance obligations.
If you’re going to socialize something, don’t let it be the banks. Let it be the common good of health care. Take over health insurance and make it universal.
How will we pay for it? Taxes, of course. But won’t that put GM back in the hole? No, because it has no profit to tax. You want to redistribute wealth, then this will have the profitable paying for health care and it will take a huge and looming burden off the big, old giants, giving them a chance — one last chance — to get their acts together.
Making health care portable and universal will also, I predict, release a flood resignations as people no longer feel trapped by their jobs because it is the only way to get coverage. This can lead, in turn, to new efficiencies in companies and a wave of entrepreneurism (and with it, innovation, wealth creation, and new tax revenue). Let’s try trickling up.
And if we’re going to use federal funds to try to improve the economy, I say we should be using it to provide universal broadband internet access better than anyone in the world: our new interstate. It will lead to more new companies, new jobs, new skills, better government, more competitiveness on the world market, and better education.
And while I’m playing New York Times columnist, giving my prescription for the nation as if I were running it, I’d take advantage of low oil prices by putting a tax on fuel that guarantees a minimum price to both keep demand low and, far more important, to fund immediate and for-once-real development of — and tax credits for — alternative energy, which will also create jobs and make us competitive in the world market.
The tragedy of the bailout is that we could use this tremendous resource and get nothing for it.
: LATER: Tom Evslin has a different proposal for a gush-up (vs. trickle down) approach (tagged ‘unscientific economics’).