"Unlike bank bailouts and auto loan guarantees, state and local aid does not rely on the business strategies of traumatized corporate executives to be effective"

It's almost cute to watch them compete with one another for our money.

---

Comments

[Brandon]

Hmmmm... nobody ever thought of not spending more than they take in? And of course, we know that all hell will break loose without enough crossing guards. STOP! THAT'S MY BABY!

[Warren]

Compete? Our money?
I thought they were just printing up tens and twenties and dropping them from helicopters. Come to think of it, they should just do that.

[rick]

I can finally get my tenured, non-accountable govm't job, just like everybody else!

Thank you, Karl Marx!

[Episiarch]

As we all know, money grows on trees, so this is not a problem. Solid gold toilets for everyone!

[speedy]

I don't understand the snark here exactly. I appreciate you don't think the government should bail anyone out, Matt, but what's wrong with a financial crisis that forces the federal government to empty its coffers while enriching state and (most importantly) local governments? Giving money to people directly would be best, sure, but isn't this decentralizing policy to be preferred to bailouts for the finance, insurance, and automobile industries? I'm not a particular fan of my local town council, and I wish they were more transparent in their dealings, but I'd still prefer my money go to them over AIG and Ford.

[John C. Randolph]

Giving money to people directly would be best,

No, letting us keep what we earn would be best.

-jcr

[Max]

Everyone will get bailed out. Stand in line. Don't push.

[P Brooks]

But local governments, largely funded by real estate taxes, have been hurt by the foreclosure crisis

Oddly enough, my property tax bill is lying on my desk right now, and it has not decreased discernably, despite the "increased affordability" of property in the area.

Fucking money-grubbing assholes. In the rare event they actually make cuts, they are based not on efficiency, or cost benefit analysis, but on intentionally stirring up the greatest fear and resentment amongst the civilians.

Maybe they could auction off the SWATters' arsenal to raise a little cash.

[Plaxico]

When banks compete, you lose.

[cmace]

When I was in 5th grade we served as crossing guards.

[Jason Beaner]

IN the end they are all going to get blank checks at our expense anyways. Main Street America always ends up with the short end of the stick!

jess
http://www.anonweb.net.tc

[domoarrigato]

Giving money to people directly would be best,

No, letting us keep what we earn would be best.

Direct handouts would be better than corporate ones, and more politically feasible than cutting taxes (which won't happen anytime soon) so maybe giving money directly to people is simple the best of the options that are currently available?

[Pro Libertate]

Is this that wealth redistribution we keep hearing about?

[T]

Funny, we have no state income tax and my state isn't going bankrupt. I haven't checked out the concerns of my new county (I just moved 2 months ago) but the old city seems to be doing just fine. And as P Brooks points out, my property taxes haven't gone down a lick. Maybe if state and local governments were more fiscally responsible, just like we're all asking Ford and GM to be, they wouldn't be having these problems.

[Mike Laursen]

Everyone will get bailed out. Stand in line. Don't push.

Oh, yeah? There's a rumor going around they're letting the biggest fuck-ups go to the head of the line.

[ceanf]

all we are seeing is further federalization of states. there are states that are becoming more and more dependent on the feds. it is to the point that these states will have lost any sovereignty they had left. any state that accepts a bailout will become a puppet of the feds. and the feds will be sure to make them dance whenever they want something from that state.

[oldtimer]

Think of it as Poverty Redistribution and we'll almost all be equal (s).

[domoarrigato]

Given the choice between handing out money we don't have to everyone more-or-less equally, and handing out money to a priviledged and irresposible few at the top and bottom - can we agree that
a) all of the options suck
b) all lead to inflation
c) given a and b, its less bad if at least the distortion doesn't create moral hazard.

[WalMart]

Everyone will get bailed out. Stand in line. Don't push.

Would you like a job as a greeter in our Valley Stream NY store?

[T]

given a and b, its less bad if at least the distortion doesn't create moral hazard.

And which option besides not handing out money doesn't create moral hazard?

[Pro Libertate]

I vote for not giving out money at all. In fact, I did vote for that when I voted for my representative, who voted against the bailout package both times.

[TerryP]

I have no sympathy for those states that are in tough financial times. You made your bed and now you have to lie in it. In the good times instead of just spending even more money you should have been putting some money in a rainy day fund or keeping taxes low so that at some point if you had to raise them you could. Instead you spent like drunken sailors in good times and bad. Now you want the people from the states that have been more financially responsible and future generations to bail you out. What kind of lesson does that teach. Basically that irresponsibility pays. No, now you need to feel the pain of your past mistakes so that you won't repeat them in the future. If you are never accountable for your poor decisions why will you make better decisions in the future. What incentives are there? With a bailout the incentives are for you to continue to spend money and make poor decisions.

[P Brooks]

Votes ain't cheap, you know.

[Mr. Obvious]

So they want bailout money to go to covering the normally wasteful services instead of public works projects like a space elevator or a fusion reactor?

That's like those wall street fucks getting their bailouts so they can continue to drink overpriced coffee and keep on taking their Enzyte without changing their monetary behavior.

[Hazel Meade]

I love how he's all "OMG! We might have to lay off some crossing guards!"

Like civilization would collapse without them.

[Dave W.]

Media consolidation fan Matt Welch uses the word "compete," in the sense of businesses economically competing, and, what's more, uses it correctly. If I had made a bet I woulda lost it today!

So sick and sad what "competition" has come to in the free "market" You Ess uv Ay.

[joe]

speedy,

I appreciate you don't think the government should bail anyone out, Matt, but what's wrong with a financial crisis that forces the federal government to empty its coffers while enriching state and (most importantly) local governments? Giving money to people directly would be best, sure, but isn't this decentralizing policy to be preferred to bailouts for the finance, insurance, and automobile industries?

You might as well ask a tribesman in a culture that forbids the shedding of blood within the tribe whether it's better to treat blindness with cataract surgery or by lopping off an arm.

ZOMG, YOU WANT TO CUT YOUR KINSMAN! TABOO TABOO!

There is nothing useful to be found on the recession, the credit markets, and the government's response on this web site.

[PM770]

This is one of the MOST useful sites regarding the recession, the credit markets and the government response.

This is the one site that has consistently stood against the varying degrees of "we needed to do something, anything, even if its wrong!" approach that almost all other sites have taken.

[domoarrigato]

There is nothing useful to be found on the recession, the credit markets, and the government's response on this web site.

Sadly, I am coming to agree with you. The more I post here, the more I hear the same old refrains that are posted without critical thinking or realisticly appraising the political climate and situation. Some are thoughtful and nuanced, however, many seem to be mindless.

Joe I'm not sure where you were going with the ZOMG,cataract, taboo riff unless the tribe refers to libertarians - in which case I kind of agree.

People, we HAVE a bailout - this is reality. You can accept it, and have meaningful discussion on the least harmful manner of it, or cover your eyes up, and shout "NO NO NO" and be completely irrellevant. Sigh.

[Pro Libertate]

What irks me at the state and local level is the hue and cry about them not having enough money. Of course, what I've been noting for much of the last decade is their willingness to expand government spending during a surplus period without any thought about the inevitable economic (and tax revenue) downturn. This is evident in Florida, which is one of the best if not the best state in regards to fiscal responsibility, so Zod only knows what is happening in other states.

Look for a massive expansion of various state taxes. . .like on your Internet transactions, for instance. On the latter point, the federal government will help the states arrange to take more of your money.

By the way, the government-driven panic and overdrive meddling are bad things. Come back and read that statement in a few years and see if you don't agree then.

[J sub D]

I loved how the writer went straight for the OMG, The Children! hysteria.

When I was in 5th grade we served as crossing guards.

Me too. They paid us with hot chocolate in the winter and a party (no booze or hookers though) at the end of the year. Nobody got hit by a car with unpaid students holding up traffic instaed of adults. Seems drivers will stop for a kid holding up the sign just like they will for a marginally employable adult.

Who'd a thunk that?!

[P Brooks]

People, we HAVE a bailout - this is reality. You can accept it, and have meaningful discussion on the least harmful manner of it, or cover your eyes up, and shout "NO NO NO" and be completely irrellevant. Sigh.

Why do we have a bailout? Because the cumulative unintended consequences of government policy since the 'thirties have caught up with us. We have allowed the government to become more and more powerful, and intrude farther and farther into the day to day workings of the economy. The government disorts economic activity, to huge effect, on the macro- and micro- level.

Individual and corporate actors have captured the regulatory process in order to erect barriers to competition, and to artificially increase their profits.

When the fucking Nimitz is in your swimming pool, you can't do much except throw rocks and give them the finger.

[P Brooks]

There is nothing useful to be found on the recession, the credit markets, and the government's response on this web site.

Boo fekkin hoo

I think I hear Katrina vanden Heuvel calling you, joe.

[PM770]

domoarrigato,

One of the reasons the bank bailout won't work is already becoming apparent. Part of the rationale was "we need to get this money into the financial industry because the credit markets have seized up and this will get the money back into the system" The banks are taking the money and hoarding it (for future losses or fear that more lending will result in more disproportionate losses) or using it for M&A like PNC did with NCB (who was denied their request for bailout funds).

So part of the initial rationale for the bailout is already, at this early date, faulty and not happening as they thought it would.

It is still worth pointing out this is a market problem and the market will correct it eventually. You can delay the inevitable by pouring $700B into the financial sector but the correction will come.

It also seems worthwhile to point out that new layers to the "bailout" keep appearing. And its worthwhile to point out that while the meter keeps running and piling up, its not turning the situation around but hindering the natural turnaround that will come, once the market has corrected.

The post right after this provided multiple links to past writing on why much of the New Deal-Depression era legislation prolonged the Depression as opposed to turning it around.

I find this to be extremely useful.

[T]

There is nothing useful to be found on the recession, the credit markets, and the government's response on this web site.

Today on H&R, watch closely as joe admits all of his posting on these subjects is useless.

Hell, joe, I'll join you. Mine is useless, too. I'm of the funny and outmoded opinion that Congress has no authority to do this, even if it were a good idea, so they should probably stop.

domoarrigato, when you're talking about throwing 8.5 trillion dollars down a rathole in a vain appeal to magical thinking ("If we spend all this money something good must happen to the economy!") what kind of damage control can be done? Can we shave a few billion off the tab? Wow. That'll help.

On this scale, tinkering at the margins is fucking pointless. The government is clearly not going to allocate the money is a transparent fashion, much less a fashion where it might the general economy some good as opposed to making some people rich while making us all slightly poorer. So, yeah, it's a bad fucking idea all the way around and there's not much to say about it. These posts are mainly so we can see how badly we're gonna get raped.

[domoarrigato]

domoarrigato, when you're talking about throwing 8.5 trillion dollars down a rathole in a vain appeal to magical thinking ("If we spend all this money something good must happen to the economy!")

This magazine and very few others recognize the 8.5 Trillion (OMFG!) figure. I can understand why if you believed it you would be panicked. If so, please by all means, go load up on rifles, ammo, and gold bars, move to montana and dig yourself a shelter for the coming apocalypse. But before you go, please critically examine where that notion comes from, and see if you still think you need to go.

For example, I provide a handy link for those who haven't looked at this closely. See if you can divide the programs mentioned into catagories such as "spending" and "not spending" Further see if you can figure out which ones expand the montary base and which ones merely transfer assets to the Feds balance sheet.

[domoarrigato]

BTW, its a massive project to understand all of it. I'm not suggesting this is going to be fun. But if you don't learn about how these programs work, trying to claim that somewhere the government is stealing 8.5 trillion and handing out piles of cash to god knows who is going to fall on deaf ears - and rightfully so.

[Lost_In_Translation]

domoarrigato,

I've seen no evidence that the government "HAD" to bail out the banks and alot of evidence that now that they've started shoveling money, they can't stop. How can you say no to little johnny who wants a toy car after you've given little jenny a frickin pony. I'm not buying guns and ammo not because I have faith that the government will save us, but that the market is too big to really royally fuck up. that's why I think the depression won't reoccur, because the market will recover despite the government, not because of it.

The problem with the guilded age wasn't the robber barons wealth, it was the power they had to control the strings of government and each other. We must keep government and business at odds at all times and never let this bedding down of lions and wolves to plot against the sheep. Let government be helpless and let the ingenuity of individuals and the market rebuild what government has tried to destroy.

[joe boylerplate]

People are hurting!

You libbers don't care, and that makes you mean!

I'm not a socialist!

[Egosumabbas]

domoarrigato:

I don't care if the government spent trillions on erecting a giant golden statue of Pindar (heh, I'm not talking about the philosopher). At least there will be something shiny to stare at when they tax me and inflate my savings into oblivion. With the current bailouts all that's going on is a flailing attempt to preserve the status quo: shitty GM cars, McMansions, and a bloated financial engineering "industry". Trying to pick the "best" way to spend my unborn grandchildren's money is an exercise in futility--especially when the tab has grown to 8.5 billion dollars. (As a note, trying to split hairs as to The Bailout being on the Fed balance sheet, debt, or increased taxes is just more hand waving)

[Mike Laursen]

There is nothing useful to be found on the recession, the credit markets, and the government's response on this web site.

And you spent all that time pulling Sally Elizabeth Pernkelhopfer's pigtails in Third Grade because you thought she was a dumb, stupid, ugly girl with kooties.

[Craig]

Why not just give every family in America a check for $100,000? Recession over, and it only costs $10 trillion, not much more than what has been promised already. Let's just borrow our way to prosperity; that ought to work!

[Craig]

A research project for Reason:

For the 40 states pleading poverty, calculate the percentage of increase in their state budgets since 2001.

Just a guess, but I suspect that most of them have ramped up spending significantly as the higher tax revenues from the artificial boom rolled in.

[domoarrigato]

Craig bring up a GREAT point.

Why doesn't the government just write 100 million checks for 85 large? That would be 8.5 trillion. If you are against the bailout because you think someone is spending 8.5 trillion of your money, you need to figure out why writing those checks is not an option.

(As a note, trying to split hairs as to The Bailout being on the Fed balance sheet, debt, or increased taxes is just more hand waving)

No it isn't. If you don't care enough to figure out why not, then I can't help you. The idea that all government action is by definition bad and causes inflation seems to be an entrenched paranoid belief of libertarians - much like how owning guns causes crime is for liberals, or how teaching kids to use condoms causes sex for the GOP.

[Mike Laursen]

If you are against the bailout because you think someone is spending 8.5 trillion of your money, you need to figure out why writing those checks is not an option.

Actually, although it would be a sucky plan, it's a better plan than the current one.

The idea that all government action is by definition bad and causes inflation seems to be an entrenched paranoid belief of libertarians...

You slightly mistated our position. We think the government action will cause inflation and/or higher taxes. It's based on understanding the simple principle that the funding for any government action has to come from somewhere. There's some saying about that -- something to do with lunch.

[Kaiser]

I really don't know what to do anymore but laugh, it's either that or ball up in a corner and cry. I guess there is no more bad choices anymore, just make a company, do whatever you want with it, then have the government hand you profits. No need to actually worry about bad decisions or mistakes, the government won't let you fail it's ok. This brings a famous quote to mind (which for the life of me I can't find out who said it, although it sounds like Winston Churchill) that goes something like:

democracy will only work until the people realize they can vote themselves largesse at the public trough.

[Pro Libertate]

Kaiser,

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years.

Apparently, the origins of this quote are in dispute. It's been attributed to Alexander Tyler (an 18th century historian), but it's likely an anonymous quote from the last 50-100 years.

[Lost_In_Translation]

So Pro,

What you're saying is...we're due...

Viva la revolution!!

[Pro Libertate]

Well, it's not my quote, but sure. The bad part is that we have to utterly collapse first, I think.

[cunnivore]

The US is not, and never has been, a democracy (thank God).

Also keep in mind that the majority was against the bailout. This isn't the inevitable decadence of democracy, it's a pure power grab by the elite.

[Mike Laursen]

... just make a company, do whatever you want with it, then have the government hand you profits.

I don't think it's that simple. You have to:

1a. Build a company that is big enough to employ a significant number of voters.
or
1b. Build a company that is big enough to be held in a significant number of voters' 401(k) accounts.
2. Make sure some of your golfing buddies hold high level positions at the Fed or the White House.
3. Fuck your company up real good. The more you fuck it up the better your bailout will be.

[Lost_In_Translation]

cunnivore,

We may be a constitutional republic, but I think Pro's point remains. We're so corrupted by the thought that someone else can pay for our lifestyle that we'll do anything to maintain that illusion. A person is only worth what his output is worth and with few exceptions this is the way it should be. I wish I could laugh at "Atlas Shrugged", but any day now I expect to see the Anti-dog-eat-dog bill and Equality of Opportunity bill come through the chambers of congress. Will the decline stop or will it drag us into another depression?