by Victor Davis Hanson
I do not understand at all this going into debt for almost another trillion dollars, and then immediately promising to balance the budget soon (like blowing off your foot near an emergency room), or how “stimulate” differs from “borrow,” or why the more noble victim is the one who sought to borrow too much for too much house and then defaulted, rather than he who chose to borrow less for less house and paid his mortgage on time each month and now subsidizes the less responsible. (The former apparently will still have the larger house, the latter the smaller.)
Some other perverse thoughts:
1) If one were, say, to have $400,000 in cash in a passbook account at either Citibank or Bank of America (both about broke), and also separately owed them $150,000 on a home mortgage; and if they went under, or had to recapitalize and then informed one that only the first $250,000 of the passbook was covered under FDIC (you laugh? But why have such deposit insurance limits, if all money in all savings accounts were really to be covered?), and thus admitted that they had lost one’s balance of $150,000 that exceeded federal insurance, could one then just say, “No problem, you canceled what you owed me, so likewise I just cancelled what I owe you on the house and we will call it even?”
2) If we put salary caps on CEOs whose companies beg for federal hand-outs (I have no objection to this), why not do the same for those who want mortgage bail-outs? If the government rescues their loans (through reduced principle or interest or both), then why can it not say that if the house is ever sold at a profit over the renegotiated and readjusted debt, the government is entitled to at least half the ensuing profits?
3) Can we ask politicians to give back monies received from now failed like entities like Countrywide? It is said that those who cashed out with Bernie Madoff, may, if the closing out was done recently, have to return their cash. Why then would not a Chris Dodd or Barney Frank not have to do the same thing — since at the time they were given the contributions, their benefactors were obviously insolvent, and had hid that fact from their share-holders? (I don’t know whether the now broke Tony Rezko would qualify under such a proposed statute, but he seemed to have little real capital when he blessed the Obamas, through a subsidized low price, with that strip of land adjoining their yard. His debtors, at any rate, would not have liked him to be so free with their money.)
4). Politicians have become like the CEOs they caricature. The only difference is that their poorly-run corporations cannot go broke. How odd to see a spendthrift Bank of America or Citibank mogul chewed up by a profligate Senator who is responsible not for $100 billion in subprime toxic assets, but for $13 trillion in run up deficits. Strange it is to see Nancy Pelosi rail about private jets for corporations that indirectetly get U.S. subsidies when she flies on one through direct government subsidies. The truth is that now it is far better to be Speaker of the House, Senate Majority Leader, or House whip making a paltry $200,000 or so than to be the head of Goldman-Sachs or GM. The jets are better, the traffic-interrupting motorcades are quicker, the perks, free food, gas, car, or limo are as good or superior, and the deference and status outdo those in the corporate world. A cabinet officer or Congressional leader gets all the slush of the CEOs without the risk or liability of going broke. There is no broke — ever. You come into office, spend, take the perks, and go out leaving a greater debt to your successor who likewise prints more money. And if you are a Ted Stevens, Charlie Rangel, Chris Dodd or John Murtha, instead of obscene stock options, your freebies aren’t even taxed — or known.
5) If we specify spending, cannot we line item debt? Imagine a formula — $1 trillion deficit = $333 billion more that Hillary begs from the Chinese to borrow; $333 billion in printing more money and inflating the economy; $333 billion we raise by appealing to the ‘patriotism’ of the “rich” who are to pay more taxes. It would be quite honest to match every borrowed dollar with every new spending plan: “Harry, you want that $6-8 billion rail line from Vegas to LA? Well then, fly to Tokyo and float a loan with Honda.” Or “Nancy, really want to save those poor mice in the mud of San Francisco Bay? Fine — but first inform 200 or so elites in Piedmont, Atherton, and Pacific Heights that they have to fork over $150,000 each for the extra $30 million.”
These are silly thoughts — but then this is a weird recession too.
©2009 Victor Davis Hanson