Bo Shuff

Trickle Up Bailout

Filed By Bo Shuff | September 24, 2008 4:00 PM | comments

Filed in: Living, Politics
Tags: American economy, budget, economic policy, government bailout

I'm not an economist. I have no clue how any of that stuff works, and I don't really understand, to be honest, how companies that have to be bailed out to the tune of $700 billion can even still be functioning.

However, I have an idea that might be incredibly stupid, but it might also still work.

I understand, I think that the biggest concern with these companies crashing is cash liquidity. One of the possible problems is institutions will stop loaning any money at all - including loans for construction, gas for truck fleets, etc - the type of loans that keep our jobs and economy going. So, one of the things this bailout will do is infuse a massive amount of cash into the system that will hopefully keep everything flowing. I think that part makes sense.

The part I don't understand, however, is why we would bailout the companies who fucked up with taxpayer money while hurting the taxpayers who are struggling under debt, etc. Why would the money go to the top and not to the individuals who need it most - the ones who are losing their homes and livelihood?

So here's my idea. The Federal Government takes every single American citizen's credit card and revolving debt bill and pays it. According to the total of American's revolving debt totals $952 billion. Now granted that is higher than the $700 billion that would go to corporations, but this money would actually benefit people. According to the same website 74% of American households have credit cards and 58% carry a balance, so the majority of Americans would also benefit from this program.

I'm not talking about bogus rebate checks like we got last year. Though nice, they didn't help do all that much. The U.S Treasury would cut checks directly to the financial institutions that hold the debt. Line by line every American would become debt free. The nasty practices of the card companies would end as Americans wouldn't rely on credit anymore. Americans would have far more liquid cash per month to make sure they can pay their mortgage and bills. Banks would get back to the business of keeping the American economy going by keeping the cash moving.

Clearly it's just an idea, but sometimes the crazy ideas actually work. All I know for sure is if you are going to spend a dime of American taxpayer money, it should go back to the American taxpayers first.

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"The Federal Government takes every single American citizen's credit card and revolving debt bill and pays it."

I was actually thinking about having the gov't pay off everyone's mortgage - but this would probably benefit more people.

Which, of course, is why the Bush Junta won't even consider it.

Bo, they were saying on NPR this morning that the credit card industry is likely to be next in the government bread line.

While you have a good idea in theory, I think it sets a very dangerous precedent. Run up as much credit card debt as you want to, because the government will pick up the tab. I don't think it's a very good answer to the current economic crunch. Americans have been spending far more than they make for far too long. And if all that credit card debt were magically erased, I find it hard to believe that people wouldn't just go back to their old habits.

Another problem is that all of this government money doesn't fall from trees. The US Treasury is selling off assets to other countries, primarily China, to pay for these bailouts. How do you think that effects our foreign policy? There is going to come a point in time that China will call in these debts. And if the current trends continue, I don't think that the US will be able to pay.

Finally, you know that the $700 billion dollars that the government is about to dump onto Wall Street is going to drive up inflation. The only way that money is going to materialize is by printing more of it, making an already weak dollar weaker. This also puts us in a weak position compared to other countries because we already import far more than we export. And as the dollar becomes worth less and less, other countries (like China) can strong arm us into accepting whatever trade deals they demand.

I'm not saying that your idea is completely far fetched, and I'm by no means an economist either. But I just don't see that eliminating the nation's credit card debt as a solution. Perhaps if the government were to bail out the home owners who couldn't pay their mortgages, I'd be more sympathetic to a bail out. But that has it's problems, too (most of which I've already mentioned).

A couple of things here. One, unlike Bush I wouldn't advocate for giving the money witihout any strings. Anyone whose credit card debt gets taken over can only ever have XX% of income in debt in the future for example. Credit card companies would be faced with far harsher regulation, etc.

The continuing problem of our Federal Government is a continuous reactive mentality. We reacted to 9-11, reacted to Katrina, etc. If we knoe that the credit card companies are the next wave of doom, then this action would both react to the need for an influx of cash into the market and be proactive about the impending credit crisis.

While I agree that there are problems with the possible devaluation of the dollar, the elimination of debt will also allow average Americans to spend the money the use presently to service debt on basic necessities. This increas in buying power will begin to level out the trade defecits as Americans have more ability to purchase without going into debt.

Furthermore, the strings that come with the cash would also allow real regulation of credit and require businesses to reexamine their business models to not include massive profits of card driven interest, etc. If American's were forcibly pushed off credit cards there may be a window of opportunity to change our spending habits and change our economy.

I'm not saying it's orthodox, or not ripe with pitfalls, but it's something to think about.

Well, while we're being generous and having Christmas in September, why not buy up all the mortgages and the credit card debt? I mean, in for a penny in for a pound!

Well, I think it would help more to pay off mortgages. That's the base of this crisis, although that's far more expensive.

But that'd be giving money directly to those who caused the problem, still. People are defaulting on their loans and finance firms aren't getting their money, so they need someone to buy up those bad loans.

So, in effect, this bail-out is just that, paying off people's loans. Although people would still be obligated to pay the government, but they could default on someone's else's dime at that point.

This whole thing is so dumb. And it's all because Americans drank the deregulation kool-aid for the past three decades. Even if there is a bailout, even if there is tough regulation afterwards, I don't know what we can do about people being so sympathetic to getting rid of corporate regulation.

Brynn Craffey Brynn Craffey | September 24, 2008 7:10 PM

Run up as much credit card debt as you want to, because the government will pick up the tab.

Serena, I know you're not necessarily approving of the government bailout, but isn't that what in essence it would do? Pay off the bad debt that these companies rushed into, letting them off scott free?

Funny how it looks so different when it's individuals on the receiving end of the bailout, isn't it?

Interesting idea, Bo!

Hey Brynn, I'm not for these companies getting off at all. But I'm also against paying off other people's credit card debt.

I don't think that's what she's saying. I read Serena's comment to mean that paying off credit card debt won't solve the mortgage crisis.

It's like invading Iraq to get the Taliban: it makes no sense.

That and, yeah, automatically paying off anyone's debt without any inquiry into why it's there and nothing done to prevent the problem again is irresponsible and breeds irresponsibly. That's why I'm plenty mad at the idea of bailing out these bankers.

Robert Ganshorn Robert Ganshorn | September 25, 2008 12:20 AM

I think we have to remember that it was speculation that drove the decisions of many to buy a house to have it appreciate in value to borrow against it. Some people, not wealthy people, bought five, ten or more houses with the plan of flipping them at a profit. You already know what happened.

The banking system is absolutely necessary to the health of American industry. This AM on CNN Asia I learned that GM has no more credit line. Catepillar Corp (who is healthy) needed to borrow a billion and a half dollars this week and because of the state of the markets have to pay 7 1/2% interest when a week before it would have been half that amount. What does that do to the likelihood of layoffs.

Credit cards are essential as if you lose them you are not losing all (or often any)of your money. Walking around with wads of cash is not an option. The difference is to mentally treat each credit card purchase as a cash purchase. In my 55 years I have failed to pay credit cards in full on only four monthly occasions. In any given month that I could not pay in full it was certain to be whatever card charged the lowest interest rate at the time.

I know there is a feeling that we are rewarding irresponsible behavior of these banking and brokerage companies. Properly done those found responsible will not just fail to be rewarded they will be looking at fines and prison time.

Wrong again.

Banks are the problem, nationalizing them is is the solution.

The Carter/Reagan/Clinton/Bush administrations deregulated banking and financial and rich speculators system made billions from predatory loans, a change in bankruptcy rules thoughtfully provide them hustlers from both parties like Joe Biden, the export of jobs with the connivance of the Carter/Reagan/Clinton/Bush administrations and twenty five years of tax cuts for the rich. They and they alone are responsible for this crisis and the bailout is an attempt to make us cover their losses.

Essentially the bailout is an example of Reaganite Thatcherite voodoo economics. Their economic game plan consists of nationalizing the debt of profiteering speculators and making us pay if off while allowing those same profiteers unlimited scope for theft of our assets through the mechanism of predatory banking and financial practices. The Democrats plan only differs from Bushes slightly. It offers a few sops to working people to distract them from the most colossal and incredibly callous case of government theft in history.

What the bailout, with or without the petty changes proposed by Pelosi means in real life is several decades of even more austerity for working people, an even greater loss in our standard of living, the end of any chance of needed social programs like socialized medicine and even more cuts in infrastructure (dams, bridges, levees), fewer libraries, hospitals, schools, scholarships and more tent cities which may well become known either as Obamavilles or McCities.

Since it’s improbable that working people are going to accept that it’ll mean more repressive measures like the Paytriot act, attacks on unions and FISA like attacks on the Bill of Rights. We’ll all live in Denver or St. Paul soon.

The solution is obvious. Nationalize the banking, financial and insurance industries without compensation to stockholders and run them with democratically bodies (the real kind, not the Obama, Biden kind).

That should be combined with a 10 year moratorium on foreclosures, garnishments and repos plus the abrogation of predatory mortgagees and credit card rates, which can easily (if there's no profiteering involved) be rolled back to one or two percent to cover administering them.

The Republicans want a bailout. The Democrats will basically, after much handwringing, go along with it. That’s another reason, if any was need for us vote for the union led and financed US Labor Party if it makes it past the anti-democratic roadblocks put up by the Democrats (sic). If not vote for socialist or communist candidates as a protest or join the scores of millions who sit it out because they’re smart enough to refuse to vote for the lesser bigot, the lesser warmonger or the lesser evil. And don’t forget to vote against all the anti-GLBT referenda and initiatives. Help build a GLBT left to get us out of this mess.

You are trying to tell me that a "union run and financed" party is the solution? You have got to be joking.

I am a fan of unions, I have been the member of two different unions as well as part of the bargaining team the last go around.

However, the idea that anything run by the unions will be any less politicized or corrupt than the D or R party of present is laughable.

The organizations invovled with Jimmy Hoffa are going to fix our problems? The guys that make it so I can't carry a box across a convention hall have the cutting edge and creative solutions to the economic problems of our day to move us forward?

Unions are failing to adapt to a changing marketplace and therefore have become smaller and smaller each year. If they can't figure out the market and adapt for their own survival, how are they possibly going to figure out the market for our survival?

In addition, your notion of a protest or sit-out vote is quaint. How can I say I participated without actually participating in a way that matters. Third party candidates can win office in this country. It is rare, but it happens when the candidate offers some substance and real potential for change. That isn't present in this Presidential Election. Therefore choosing to vote for one of the lesser parties is the hypocritical action of trying to participate without actually participating. If you think they are both bad, then yes, the choice is the lesser of two evils. With more candidates in the race, it would simply become the lesser of more evils, simply becuase you are never going to agree with 100% of what someone else thinks.

Robert Ganshorn Robert Ganshorn | September 25, 2008 10:07 AM

Oh Bo, you are my hero! Without a functioning, and properly regulated, banking system the very people our socialist friend pretends to champion will really suffer when all factories close simultaneously.

We must resolve this issue quickly, but with oversight, safeguards to the taxpayer, a means of refi to the deceived individual homeowner, zero golden parachutes and full FBI investigations to unearth illegal behavior for prosecution. Why the Republicans and the Republican controlled congress learned nothing from Enron's meltdown I cannot imagine.

Those congressmen/women impatient to get back to their districts and campaign had best stay engaged in this problem for it means more to their reelection than any rubber chicken dinner they might attend.

I am a fan of unions…

Nonsense! You’re not a fan of unions at all. You have to be totally uninformed about the role of trade unions to compare them to the depraved hustlers in the twin parties or to the predatory corporate rich and the speculators.

But that’s exactly what you do. You say “However, the idea that anything run by the unions will be any less politicized or corrupt than the D or R party of present is laughable.” Trying to compare the corruption of a tiny percentage of union bureaucracts, which usually consists of taking bribes from bosses or dipping into retrirement funds with the utterly irreformable, across the board depravity of Democratic and Republican politicians and the corporate swindlers they service is like comparing a bee sting to a rattler bite. Your comparison is unbelievable however you formulate it.

You paint the whole union movement with the brush of corruption by repeating the lies of another right wing Democrat, Robert Kennedy, about Hoffa and the Teamsters. (If you're open to new ideas I'll be happy to email you the titles of a dozen books on the role of the Teamsters and the union movement that might give the real facts about unions.) They are our only defense against the predations of the rich and the politicians who enable them.

Ask yourself, Bo. When have unions betrayed consumers and workers like Carter, Clinton and Biden, Reagan and the Bushes whose bipartisan deregulation of corporate predators created the multi trillion dollar debacles that threaten our standard of living?

Bo, when have the unions used a pack of absurd lies about Vietnamese sampans attacking the US Pacific fleet, or Iraqi WMDs, including nukes, and equally preposterous racist lies about a nation of terrorists to cover their empire building genocides. When have unions ever started a war BO? When have they acted like the depraved mass murderers named LBJ and Humphrey, Clinton and Gore, Nixon and Agnew and Cheney and Bush.

Nevertheless your advice is that we vote for more of the same!? I think I’ll pass, I don’t have the stomach to vote for mass murderers and that is exaclty what McCain or Obama will become the second they take office. Both plan on coninuing and extending the war.

Attempting to compare a bit of minor corruption by a few bureaucratic union sellouts to economic collapse at the hands of politicans and speculaors is a mind-boggling distortion of union history. It parrots the rightwing lies of sleazy politicians, the Chamber of Commerce and other apologists for the real corruption that holds this country in a death grip.

Bo, you can vote for the twin Parties of war, economic collapse and bigotry if you want, but do you have to rub it in our faces? Do you have to pretend that it's something other than voting against the interests of the GLBT communities, against the GIs and Middle Easterners being murdered to steal oil, or for the politicians who are responsible for the predatory speculators?

The reason I ask is because voting for the Democrats is a vote FOR genocide, a vote for sleazy opportunists like Obama who pander to bigots and will be owned by them, and a vote for the bailout.

Bo, lets face it. I know unionists and you’re no unionist. In fact, if you’re Ganshorns latest hero (after LBJ, Churchill and the Clintons, bankers and the rich) your opinions can’t be exactly described as progressive.

US Labor Party - Who is your candidate?

Not Corrupt or Politicized - you focused only on my example of Hoffa, without offering any counter evidence that they, as organizations are not corrput or politicized. I never made any claims that they started a war, that they ran over consumers or that they murdered anyone. I said they are as corrupt and politicized as the parties, and I stand by that. The higher ups within the union, just like the higher ups within a party, are tainted and slanted by their own personal well being and their own personal gain.

If you want a more modern day example - let's examine SEIU and their pensions.

"In 2006, the SEIU National Industry Pension Plan, a plan for the rank-and-file members, covering 100,787 workers, was 75% funded. That is, it had three-fourths of the money it needed to pay benefit obligations of workers and retirees.

In contrast, a separate fund for the union's own employees, numbering 1,305, participants was 91% funded. Even better, the pension fund for SEIU officers and employees, which had 6,595 members, was 103% funded." NY Sun July 9, 2008

As you can see, unions, just like the corporations and parties you railed at me about clearly favor the top over the rank and file.

Furthermore - if the US Labor Party is so supported by Unions, why has almost every union in the country endorsed Obama?

It has to be one of two things
1. Obama is good on labor issues.
2. Union leaders are more concerned with their own power than actually impacting real change for their members.

Which is it?

Where exactly have the unions been on LGBT issues? I would say a pretty mixed bag - kinda similar to the Democratic Party.

I beleive that unions have a responsiblity to serve their members by negotiating contracts and defending workers against unfair encroachment on those contracts by management. I believe that Unions give voice to the voiceless and power to the powerless within corporate America. I beleive that good jobs, fair wages and weekends are all thanks to the Unions. I believe that Unions, like political parties are fantastic organizations and that there are corrupt and tainted people at the top of all of them to equal levels. Government leaders line their pockets with tax dollars, business leaders line their pockets with shareholder dollars, church leaders line their pockets with offering dollars and union leaders line their pockets with dues dollars. It is the nature of power.

You may say that I am not a progressive. That's your opinion and you are entitled to it. However, how progressive is it to back organizational structures that have existed for eons and still can't exert enough power to even pass laws that guarantee equal pay for equal work?

Progressivism is about forward thinking ideas and new concepts. It should not be used as a code word for anything else.

I read the Labor Party's "Call for Economic Justice." It's non-discrimination clause leaves out gender identity. How progressive.

It seeks to amend the constitution to guarantee everyone a "living wage job." How exactly do you accomplish that.

It's call for paid family leave would exclude same-sex couples - ask SEIU in Ohio about that - they are experts at leaving out our families.

In fact, much of the Labor Party's Platform seems very smiliar to the Democratic Party Platform.

The only difference is - who is standing on it? Who is your candidate?

Robert Ganshorn Robert Ganshorn | September 26, 2008 12:35 AM

Bo, the good news is that you have defended your ideas with logical examples and knowledge. The bad news is that the chance of invading and conquering the rusty ideas of "he who cannot punctuate" mirrors our success at Tora Bora.

*He will not answer an economic question as he does not know how to.* Simply has no argument other than his voting commercial among other things such as "Joining people at the hip in drag." He obtains great satisfaction from getting us to respond to him, and I kind of think of it as Charity.

I have been in two unions beginning when I was 16 and through my college years, but that did not prepare me for reality. I paid my dues and they were happy to take them. Where they went I do not know, but I have never seen a pension statement for me.

I am going to say it: Unions have a fatal flaw and it is why they are dieing. They stifle innovation in the workplace and allow people to stay in a position when they no longer wish to learn new ways of accomplishing old tasks.

"Hey, if I do that it might cost one of my Brothers a job."

So they carry wooden ladders that require two people to carry them rather than an aluminum one that one person can carry.

I have done many trade shows at McCormick Place and other venues around the United States. I was only ever viewed as walking money by the unions who typically wanted a four hour minimum for the carpenter($95.00 per hour)who did not know how to do anything to set up glass display fixtures. I would be doing all the work and the carpenter would be handing me sheets of glass. My dad (God rest him) would come in to help me set up. He spent 50 years in the railroad union and he knew BS when he saw it.

If an "exhibitor" complained it was not unheard of to have a fork lift "accidentally" run through your booth filled with merchandise. The crew bosses were spending a great amount of time talking with shaved headed guys named "Vinnie." Without telling me, dad went and had a chat with the shop steward, and in future we at least got a carpenter's union member who knew how to set up the type of display fixtures we used.

On one occasion (at frustration over stupidity) I sang "Look for the Union Label" to an electrician. :)

Finally, the cost, theft and damage caused by them (and a near death ulcer attack) drove me out of McCormick Place and in to a permanent non union showroom in the Merchandise Mart. Since the 1930's when Curly Humphreys stumbled upon the value of union pension funds in Chicago there has been corruption in unions. It is much less today than it has ever been. Some poor Socialists support those who would cheat them. Some unions would rather have the factory go out of business than tell their members they have to go back to school.

Bo as long as you equate the pettifogging corruption of a few union leaders to the depraved speculators who’ve ruined our economy and the politicians who service them I’ll continue to say you’re dead wrong. There is no comparison with the corruption of genocidal leaders like LBJ and Nixon, Clinton and Bush. The unions are not at all like the Democrats. Unions fight daily for equality on the job. The Democrats, your, and not just Frank, but most Democrats gutted ENDA. And in the process they deliberately tried, and with some success, to divide the LGBT communities.

AS for the Labor Party it’s not going to play much of a role because much of it’s progress has been held back by Sweeney and other AFL-CIO bureaucrats who want us, as you do, to vote FOR bigotry, war and economic collapse even though they, like you, say they’re against those things.

I live in Nevada and have the privilege of voting for “none of the above candidates” which is what I’ll do. I don’t feel compelled to vote for a candidate just because they’ll win. But I will say that if Obama wins and has to prosecute an unwinnable war while the economy tanks he’ll be Nixon Redux and Hoover Redux. It will help dismantle the two parties of war and economic chaos whose leaders have never stopped pandering to bigots. I can’t imagine why anyone could like that enough to vote for it.

I think it’s excellent for the left and minorities to run independent campaigns as an educational tool, but this is not a democracy and it will not be changed in the voting booth. It will be changed when unions, ourselves, women, African Americans and immigrants and other build movements massive enough and militant enough to get our way. Especially unions. Management types like to belittle working people and our unions but unions are the heavy infantry of social change.

If, and its not clear yet, this crisis matures into a repeat of the Great Depression that will become crystal clear. Unions are our only guarantee of prosperity because in a very real the Great Depression never ended; it just got hidden behind the massive spending of the military industrial complex. That’s the real reason for Korea, the Cold War, Cuba, Vietnam and Iraq. They keep retargeting but they keep fighting.

BTW the stats you cited about SEIU are one of the reasons why Andy Stern's little empire is crumbling. This is a bad time to be out of a job, and hopefully he'll be able to find that our first hand.

Ok. So you have agreed that Sweeny and Stern, in charge of the largest unions, have both placed themselves above thier unions. So, it seems that unions that "build movements massive enough and militant enough to get our way" are the ones most prone to corruption and problems.

Which Unions should we use as an example of the ones without corruption then or the ones that can build these massive unions?

Or, can we at this point agree that every institution has corrupt or tainted invidiuals in the positions that hold power?

No we don't agree at all. Your question only proves that your views are profoundly ahistoric. They’re a variant of the flat-earth thinking that dismisses social context. It ignores our response to the class war being waged against us by corporate rich. In discussion of politics and economics change is the constant and nothing is static.

Your attempt to equate a little minor corruption in the unions, or the political timidity of Sweeney with the depravity of the war makers, bigots and economic predators of the party that you support is ridiculous. You can’t get away with saying that they’re even remotely on the same scale, even as an excuse to throw up you hands and supinely vote for the lesser warmonger, the lesser bigot or the lesser pet of Wall Street, whether you choice is McCain or Obama.

The opinions of right-wingers who try to defuse the defense of working people agaisnt the attacks on our standard of living is a great comfort to the speculators and the DC politicians who service them while screwing screw us. Clinton was expert at it and Obama is a Clinton clone. The fondest hope of opportunist hustlers like Obama and McCain is that will throw up their hands and step aside, refusing to take sides when push comes to shove.

Once again, let me offer to email you a list of books about unions, and the radical and often revolutionary history of the US. You need a crash course in how the big questions get settled.

I make that offer to help dispel some of your cynicism and pessimism. It’s unwarranted. If you knew anything at all about the history of social change you’d know that as the shock of collapse or oppression wears thin people always get very radical. The institutions they’ve built to defend themselves, whether it’s the Minutemen militia of 1776, the Union Army or the AFL-CIO then become instruments for fundamental social change. That view coupled with the kind of program I outlined is a way to organize working people that will bring matters to a head.

If this crisis matures into a repeat of the Great Depression, or more accurately, a continuation of it some people are going to be scared stiff. The contest for power between working people and the banking, financial and political vermin who run this country will be shocking and mysterious to them. But, as you can see from the comments on this subject and the reaction of working people throughout the US lots and lots of us are looking forward to a time when the class war will not be so one sided.

Robert Ganshorn Robert Ganshorn | September 27, 2008 5:08 AM

Without the "corporate rich" you could not find your way to the supermarket. Create something! Innovate and make something more efficient.

if you do not feel adequately valued at your job it is your responsibility to hone your skills for yourself. Life is not a game where people give you all your pieces back after you have lost them.

Foreclosures are destroying property values on Main Street.

Foreclosures are destroying balance sheets on Wall Street.

Stop foreclosures and you fix the problem.

1. Allow participating companies, and bankruptcy judges to reduce mortgage loan balances in order to keep homeowners in their homes – and stop foreclosures.
2. This will immediately begin to normalize property values on Wall Street.
3. This will convert non-performing loans into performing loans – and immediately begin to restore balance sheets on Wall Street.

This simplified solution resolves the root problem - foreclosures - for far less than the $700 billion shamelessly requested by Wall Street (Paulson) for Wall Street.

Wall Street should be punished - not allowed to dictate terms to America, and the Congress.

Afterall, it was Wall Street that engineered this failure.