A $700 Billion Bailout
President George Bush wants to spend $700 billion to bail out Wall Street firms carrying an estimated $1 trillion in debt from bad loans.
Bush’s proposal – which would represent the greatest government economic intervention since the Great Depression – would also raise the national debt to an unheard of $11.3 trillion. Federal overspending had already resulted in a debt of $10.6 trillion for fiscal year 2009.
As we noted last week, bad loans mandated by the government during the Clinton era have resulted in the collapse of several of Wall Street’s most prestigious firms.
Lehman Brothers collapsed last week, while Merrill Lynch was sold to Bank of America.
Meanwhile, global insurance giant AIG got an $85 billion loan from the Federal Reserve to stave off its collapse, and the government is also investing anywhere from $300 to $500 billion to rescue government-sponsored mortgage giants Fannie Mae and Freddie Mac, which are now in conservatorship.
Proponents of the Bush bailout say that failing to cover these firms’ losses will result in an even deeper financial crisis for the country, while opponents fear that Washington is simply perpetuating a disaster of its own creation, much like the impending collapse of our Social Security and Medicare systems.
America already spends billions of dollars each year to cover interest payments on the national debt.
In fiscal year 2006, for example, we spent $407 billion on interest payments, a figure which was already projected to exceed half a trillion this year before the Wall Street crisis hit.
Comments
By Janus on September 20th, 2008 at 4:54 pm
Seriously, why aren’t more Republicans upset about this? Where is Jim DeMint on this?
By Albert H. on September 20th, 2008 at 11:37 pm
Seriously, where is Ann Rand when we need her?
By Ace on September 21st, 2008 at 8:40 am
I wish someone could compile a list of millionaires and billionaires that have been made in the last 15 years from businesses that have gone bust or been involved in illegal or unethical business practices. From the “silicon bubble” of the 80′, Enron, trading scandals of the 90’s to this mess and many others, thousands of people have become VERY RICH as the average person picks up the cost in the form of deflated stock prices, government bailouts, loss of their retirements, and decreased opportunity for needed capital.
The stain is not that these things happen; it is that no one pays a price. They sit in their homes in the Hamptons, Cape Cod or San Francisco, and wax endlessly about how bad America is…not noting how they were integral to the manifestations of greed.
In these liberal capitals of America, no one seems to ask how one made their money. Conveniently, it is the ends that seems to justify the means.
By Furman on September 22nd, 2008 at 4:31 pm
i believe that by loaning these firms money it will help restabelize the stock market which will have a snow ball effect that leads to helping prevent the recession that is goin on currently
But at the same time it will put us more in debt. but i would rather us be in debt then have a failing ecomomy
by the way hey ms. payne if your reading this
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