When a company spends recklessly, cannot afford to pay its debts, and then asks hardworking taxpayers to bail them out, is that fair?
Bailing out corporations in financial distress has recently been deemed a responsibility of government. Not surprisingly, it’s created a great deal of resentment from citizens who don’t want to pay the price of others’ greed or mistakes.
- Many executives at failing firms used government bail-out money to pay themselves multi-million dollar compensation. Some received over $5 million in pay.
- The Office of Management and Budget estimates TARP will cost taxpayers $63 billion.
But what about a government that spends recklessly, cannot afford to pay its debts, then asks hardworking taxpayers to bail them out? Is that fair?
- In 2011 we spent $711 billion for defense, double what we were spending a decade ago. That’s more than what China, Russia and the next dozen top military nations spend combined.
- Our government is borrowing 35 cents of every dollar it spends. In 2012, taxpayers spent twice as much on interest payments as it did on transportation infrastructure, and three times as much as it spent on education.
When taxpayer dollars are spent irresponsibly, be it by CEOs or politicians, Americans are straddled with a debt that’s unjust.
Integrity must be upheld on every front
Americans need to demand honesty and integrity from both the public and private sector. If we’re thinking freely, we know we can’t allow politicians to get away with fraud or deceit that we wouldn’t tolerate from the private sector.
In August 2011, Democrats and Republicans promised to work together to reduce future federal budgets through the Budget Control Act.
The White House issued a press release assuring Americans that
- legislators would place “caps on discretionary spending that will produce more than $900 billion in savings over the next 10 years,”
- recover “savings of $350 billion from the base defense budget – the first defense cut since the 1990,” and
- reduce “domestic discretionary spending to the lowest level since Eisenhower… through entitlement and tax reform.”
The deadline for this deal was January 2013, two months after the 2012 elections.
In the ensuing 17 months, both Democrats and Republicans failed to budge in any negotiations, delivering on none of these promises.
When an automatic “sequester” budget cut of 1.2% kicked in, the President called it “brutal” and “severe.” (Though after many media stories prove this to be an overstatement, he backpedaled, changing his protest to, “This is not the apocalypse. It’s just dumb.”)
But if shaving such a small percentage from this year’s budget seems so arduous, how are we to believe that our representatives ever intended to hold up the bipartisan agreement in the first place?
Why is such a minor reduction so difficult?
We’ve been warned of the major effects the sequester cuts may produce. Supposedly branches of the military will be cut to the bone, we’ll be waiting for hours to go through airport security, national parks will shut down, etc.
What neither Democrats nor Republicans are explaining is that more than two-thirds of federal spending is labeled “mandatory” and isn’t on the negotiation table. To maintain this constraint, we’d have to nearly shut down the rest of government to actually balance the budget.
No double standards
Compare the situation above to the following: Ford offers a car that will get 50 miles to the gallon. After deciding to purchase it, you learn the car actually has the same mediocre gas mileage as your old car. When you complain, you’re told by Ford’s president that you were dumb to expect a car to get that kind of mileage. But if you insist, he’ll take the doors off to get the mileage down a bit more.
Of course, the company expects you to buy their cars again next time.
As discussed in my previous post, it’s as unethical for a politician to make promises he can’t keep as it for is a businessman to do so. In fact, ethics in our public sector is even more crucial, since we have no choice but to pay for the things our legislators pass into law.
That’s my opinion. Let’s hear yours.
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Great article and I agree that we do not hold politicians to account on either side of the divide.
One point I would make regarding baling out business vs. bailing out government. People are more inclined to bail out the government if they fail simply because they feel its OUR government – we elected them and we need it to run. There is a feeling that bailing out big business, that we had no role in it and now we must foot the bill.
I’m from Ireland. We bailed out our banking sector in 2009 to the tune of 110 billion euros. Taking into account our yearly budget spending, if this had been in the US, it would have cost America $7.5 trillion to do the same. It will take generations to repay and was unfair to taxpayer.
On the flip side, it was our government who sanctioned the bail out and thus have lumped us with the dept but they only share in the blame along with our Bankers, who essentially got away with it!