Our new “spread the wealth” economy

Posted on December 8, 2008


Barack Obama, again reiterated his commitment to spread the benefits of our economy around. He’s talking once more about spreading the wealth:

PRES.-ELECT OBAMA:  Well, as I said, my economic team’s taking a look at this right now.  But, but I think the important principle–because sometimes when we start talking about taxes and I say I want a more balanced tax code, people think, well, you know, that’s class warfare.  No.  It, it turns out that our economy grows best when the benefits of the economy are most widely spread. And that has been true historically. 

Actually, Barack, when you promise to punish those evil rich folks, that is class warfare.

Doesn’t matter, though, as it seems the redistribution of our wealth seems to be the order of the day anyway. Witness the continuing bailout debacle, as now the Big Three come with outstretched hands for federal (or “your”) money. I have to admit a bit of ambivalence about this. While I detest the idea of government bailouts, I would hate to see even more manufacturing jobs hemhorrage away. The concept of the money coming as some sort of loan seems slightly more palatable, seeing as the money would go into an industry that actually produces something.

That’s in stark contrast to the $700 billion monstrosity that was the bank bailout. This wasn’t a help-out loan – it was a blatant theft of taxpayer funds to line the purses of Wall Street firms. It’s no coincidence that Hank Paulson’s old firm , Goldman Sachs, made out quite well both in allocation of funds and federal approval of bank buyouts. The sheer size of the package was only made possible by the hyperventilations of lawmakers who said “WE MUST DO SOMETHING IMMEDIATELY AND DAMN THE CONSEQUENCES!” in an election year, and whose campaigns were heavily funded by those same Wall Street firms. It didn’t have any impact on the tumbling stock marget, and remains the most disgusting display of cronyism and government largesse, besides illustrating another key difference between the two bailouts.

The auto industry failure is a ultimately result of mismanagement and poor trade and energy policy. The bank failures are the result of corruption and government interference. Fannie Mae and Freddie Mac executives made millions as they approved risky loans in order to drive their enrollment numbers up, triggering bonuses paid for by taxpayer money. Goaded by the Community Reinvestment Act, banks lowered credit requirements and unknowingly increased their chances for making bad loans. And credit recklessness was encouraged and practiced by many members of the financial system.

The auto bailout seems to be a done deal, but no doubt it will come with heavy requirements on carmakers to produce impossibly eco-friendly vehicles. Meanwhile, banks get their steady stream of cash with no strings attached and Obama continues to consider how he alone can best redistribute our resources. Through it all, government continues to grow, and the economic power of the American taxpayer continues to diminish.

Posted in: News, Politics