$700 Billion of Political Will

January 4, 2009 at 9:36 am

This is a story about 3 numbers and what these numbers tell us: $700 billion, $30 billion, and $1 million.

The $700 billion is of course the infamous financial bailout figure.

$30 billion is the amount the auto industry was asking for.

And $1 million is the amount of a contract awarded to a New Mexico transportation company that allegedly contributed to Bill Richardson’s campaign.

To put these sums into perspective, if we assume 150 million taxpayers as a round number (in 2007, there were roughly 138 million), here is what each of these is costing you:

  • Financial bailout – $4,667 per person
  • Auto bailout – $200 per person
  • Bill Richardson scandal – Less than 1 penny per person

This isn’t to say that any of these are right/wrong, but rather to put a little perspective on the numbers and to examine the politics.

The $700 billion was supposed to take bad loans off of the banks balance sheets and allow them to start lending again and to bring back the economy. Has this happened? Nope. Apparently, most banks are just sitting on the money.

Now when it comes time to fix social security or deal with the healthcare crisis, the government didn’t seem to have the political will to find $700 billion. So why now? The political will existed to send Wall Street this money for 2 reasons: 1) a small group convinced Congress that without this money, the economy would tank, and 2) trickle-down economics has become main stream.

Unfortunately, the economy is tanking anyways and without any oversight, the recipients of this money seem only interested in helping themselves.

That is to say, we basically gave the people who caused this problem in the first place, $700 billion and received nothing in return.  What could each of us have done with over $4,500?

Meanwhile, the media is spending more time on small-time scandals like tenuous connections Bill Richardson may have to a $1 million contract. Where is the grand jury to investigate what happened to the $700 billion?

Apparently, conservative ideology is still governing our government’s decisions on who to give money to and who to investigate. (Now, I’m not trying to lay this at the feet of the Republicans, but am looking at the ideology which is governing these decisions. ) Giving $700 billion to financial companies is acceptable under conservative ideology because the financial institutions are deemed too big to fail.

Giving $30 billion to GM and the auto companies is unacceptable unless the auto makers get rid of their unions. In both cases, conservatives set the agenda and Democrats complicitly went along without getting much of anything in return.

If Democrats had beens smart, they would have included responsible regulations as part of the financial bailout and forced accountability from any firms accepting money.

These stipulations would be consistent with progressive ideology. Where were they in the bailout? Nowhere. Had Democrats fought for these conditions based on their beliefs, would they be in a better position now? Definitely.

Who is instead fighting for their beliefs? The slim Republican minority that used the automakers troubles to try to further destroy the auto unions.

Though union wages are only a small part of the problem with Detroit, the conservatives fought for their “big business” agenda and came out looking good because the public does not want to keep writing blank checks.

By comparison, did Republicans fight for any wage concessions from Wall Street? No. Could the Democrats have fought for wage concessions from Wall Street? Maybe they should have. Labor represents 10% of the cost of a new car, but at Goldman Sachs, employee compensation represents 71% of operating costs.

Aren’t firms like Goldman in a better position to cut compensation? And this would at least have shown that Democrats were willing to fight for their beliefs.

If Democrats are going to truly enact change, they need to stick to their core beliefs. Even if sometimes this means a short-term loss. In the long run, they will come out ahead.