Bailing out whom?
Published 2:42 pm Tuesday, February 17, 2009
As President Barack Obama prepares to sign a historic $787 billion economic bailout plan today, many Americans are scratching their heads, wondering just what’s in it for them.
Judging by the rhetoric from the Oval Office during the past few weeks, redistributing $6,700 per American family was a vital matter of national security that could be ignored only at the risk of plunging America into a second Great Depression.
Despite the anecdotal evidence that abounds of the pain wrought by the nation’s current economic situation, however, some economists are questioning not just the wisdom of such a massive federal spending package but also the assumptions that underpinned Obama’s portrayal of its urgency.
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In a column for the Wall Street Journal, Barry R. Schiller of the University of Nevada, Reno, made some startling points about Obama’s premise. Unemployment? At 7.6 percent, less than a third of the peak levels during the Depression and 3.2 points lower than the levels of 1982. Gross domestic product? The 2-percent loss projected for 2009 doesn’t come close to the 9-percent drop registered in 1931; in fact it is on par with the loss during the recession of 1982, when GDP fell 1.9 percent. Bank failures? More than 10,000 banks were shuttered in 1933, and more than 3,000 savings and loans closed in the 1987-1988 period. Contrast those numbers with fewer than 50 failed banks during our current recession. Even the battered stock market can’t be compared to the 90-percent fall in stock values that marked the Depression.
Considering these facts, Fourth-District voters, at least, can take heart that Randy Forbes, their representative in Congress, continued last week his unbroken string of votes against the various stimulus packages that have come before lawmakers during the past year or so.
Surely some people and industries will benefit from this huge infusion of cash. But a question Forbes asked in a recent column is bound to be on the lips of many Americans as they watch the president sign this hurried legislation: “If the government asked you if you would feel better about your economic situation by keeping $6700 for your family, or sending it to the government and asking them to spend it however they would like, which one would make you feel better?”