The Wasatch Behind: Corporate bail out BS
"Good grief," Uncle Spud groaned as he turned off the TV. "I see the government is going to bail out another multi-billion dollar company with our tax dollars. What is going on here?"
"If these big companies fail, the whole country gets hurt," I said. "The president and congress are trying to keep the economy afloat by throwing a lifeline to those big outfits that are about to go under."
"Why are they going under?"
"The usual reasons," I explained. "Greed, mismanagement, risky ventures that went south, corrupt business practices, unethical corporate managers and government meddling in the economy."
"Is anyone going to jail for bankrupting those companies?" he asked.
"Not likely," I confessed. "The big shots all bail out as their firms go down in flames. One creepy CEO allegedly got a hundred million dollar golden parachute deal because he had to jump before his contract expired. What a deal."
"So what is going to hurt worse?" Spud asked. "Allowing some big businesses to fail, or mortgaging the future of our country to keep them solvent?"
"A bail out is relatively painless right now," I assured him. "It's down the road a few years when the pain catches up. By then the gutless government weasels who are making the decisions now will have bailed out and taken their big dollar pensions with them."
"It's really getting scary," he said. "First it was the savings and loan outfits and the airlines, then the big mortgage banks and the world's largest insurance company. And now some major investment firms, mutual funds managers, and the entire American auto industry are lined up on the president's doorstep with tin cups begging for handouts. Who's next? Rumor has it this bailout business might cost American taxpayers over a trillion dollars before we're done. That's a thousand billion. I don't think this country has enough money to run the government, fight a war, honor all of our social entitlements like social security, medicare and medicaid, and then underwrite our whole financial system and all of Wall Street, too. Somewhere, there's got to be a breaking point."
"Again," I assured him, "the short term solution is relatively painless. The government simply prints more money to cover the new obligations."
"Doesn't that cause inflation?" he asked.
"Sure it does," I agreed. "But it temporarily bails out the fat cats pulling the strings. It's the little people who get hurt in the long run. And the government has been doing this for years. That's why the money you have in savings is loosing value at twice the rate it earns interest. The value of the dollar is rapidly declining. Our money is only paper. We went off the gold standard in the 1930s with FDR and off the silver standard in 1964 with LBJ. Today, our currency is backed only by paper and trust, and most of us are quickly loosing the trust part."
"So if they use my hard-earned tax money to bail out these mismanaged firms and their lying, cheating, chief executives, what do I get for all my trouble?" Spud asked.
"That's a real good question," I offered. "We sure as hell ought to get more than just the cleanup bill. I think we should all get shares in the companies we rescue. After all, we individual taxpayers are investing in the future of those companies, like it or not."
"Good thinking," he said. "How about this, for every one hundred dollars you pay in federal taxes, you get back ten or more shares of AIG or Fanny Mae. And then, we all have a say in how those companies are run from now on. American taxpayers should be able to set the pay scale and benefit packages for top managers and boards of directors. No more golden parachutes. We'll make corporate outlaws jump without parachutes next time. Fair is fair. Let 'em hit the sidewalk like bird dung."
"That's a great idea," I said. "Every taxpayer could set up an I.R.A., an Individual Re-imbursement Account. Each rescued corporation would be required to send stock certificates to your IRA account each month and you would be all set for retirement."
"We'll call it investing in the future of America," Spud smiled. "Get president Bush on the phone. I want to talk to that rascal."