The reason no one can seem to get their heads wrapped around this financial crisis is because everything Henry Paulson and his colleagues do is still based on the ridiculously disastrous Reaganomics "trickle down" economic policy. It's based on the idea that if we give the people at the top (AIG, the auto industry, and whoever else?) enough money, somehow, when they get themselves all straightened out, what's left over will "trickle down" to the rest of us.
You know that old axiom about repeating the same mistake over and over again and expecting a different result? Duh.
I know there's an interesting internet "solution" floating around about giving everyone in the United States $500,000 dollars and everything would be fine. While I understand the absurdity of such a notion, there is an intriguing element of sense in that suggestion.
I firmly believe that money, at the right time and in the right amount, can be a transformative force in a person's life. If ever there was a doubt, just ask anyone who ever needed emergency food stamps during a crisis (they literally saved my life when I was in college and had to be hospitalized) or click on the link to a phenomenal grassroots organization Modest Needs, http://www.modestneeds.org/... which provides small emergency grants to individuals through funds primarily gained through seemingly minor, individual donations.
President-elect Obama has proposed a $1000 per household "economic stimulus" to get things going once he gets into office. It's a step in the right direction, but really, it won't accomplish what it is supposed to accomplish, because it's simply not enough. One thousand dollars for people who are losing their homes to unpaid mortgages or who are facing major medical costs, (and who, unfortunately, are the primary sources of the need) would accept and enjoy a check for $1000, but for those in the kind of need that threatens to make somehone homeless, it is merely a chip in the mirror. Of course, information about winners of large lottery payouts shows that too much money all at once can be devastating as well.
So, in essence, too much money can be overwhelming, too little, and it does nothing. That's how I feel about this "bailout". The amount of money the banks, corporations, insurance companies and automobile companies need to get them out of trouble is more money than most of us can even begin to imagine; and still, there is more debt, and more need, and who really benefits? The guys who have been running these very businesses into the ground are the ones who are having the lavish parties and extraordinary severance packages, while the corporations themselves remain financial black holes that swallow up taxpayer dollars without a single benefit to those spending the money....us.
Let's take another look at this from "outside the box" for a minute. Just as Barack Obama's Presidential campaign was run incredibly successfully from "the bottom up"; perhaps that's just what we need to do for the ailing economy. If we can get away from the terror of anything that even suggests "SOCIALISM", the solution, I think, is really quite simple.
Without the benefit of a mathematical background or even the proper population figures, my theory is that if the solution proposed in the internet proposal is even close to being accurate in any way, applying the same numbers in a different way could be the answer. The solution, as I received it in my letter box, and which was based on the $85 Billion dollar AIG (first) bailout went like this:
To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18+. (Our population is about 301,000,000 +/- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up.)
· So divide 200 million adults 18+ into $85 billon that equals $425,000.00.
· Let's give $425,000 to every person 18+ .
· Of course, it would NOT be tax free. So let's assume a tax rate of 30%. Every individual 18+ has to pay $127,500.00 in taxes. That sends $25,500,000,000 right back to Uncle Sam. But it means that every adult 18+ has $297,500.00 in their pocket. A husband and wife has $595,000.00.
My proposal, using similar logic but with a little more sanity included, is to provide a one-time GIFT of $10,000 to every adult citizen. No matter how much it would cost, it would still be MUCH less than the proposed billions (trillions?) that are being offered or considered or reconsidered for the major corporations, would positively affect the economy and every person in this country, and would still leave room for helping the industrial end:
· If you consider that $10,000 would be considered a lifesaving windfall for a single mother struggling to make her mortgage payments so she doesn't lose her house;
· That amount of money in the hands of a soldier wounded in Iraq and struggling to get the care he needs, or in the hands of a soldier's widowed spouse could mean the difference between a life of poverty and a life with at least their basic needs being met;
· $10,000 (or $20,000 in a two-parent home) for a middle-income family provides some relief from college tuition payments or could be the difference between buying a new car or getting the old one fixed...again.
· $10,000 for an upper-income person frees them to invest a little bit in the stock market again without fear of losing more of their own money, or allows them to consider purchasing a luxury item for someone for the holidays that they may not feel comfortable doing otherwise.
· As for the very wealthy, those who need it least but who are trying to get much more than that through the corporate bailouts, if they notice it at all, perhaps they will forward it on to their favorite charity or foundation, all of which are hurting as well.
The advantage of providing this money to the citizenry is more than just providing relief to each individual or family, the impact on the economy would be nearly a miracle cure:
· Mortgages (not all, but many, I'm assuming) would be paid or at least paid down, relieving the mortgage companies of at least some of their burden, while allowing people to stay in their homes.
· New cars would be purchased (I'm guessing LOTS of them) which should alleviate the auto industry, as well as the banking industry, as people will require some financing even on top of the $10,000.
· Small business owners could relax knowing their personal financial situation is less strained, and could make sure their bills and employees are paid, perhaps to re-investment in their businesses.
No matter what the financial status of the people who would receive these checks, and even if they didn't pay off their debts and instead, went out and "blew it" on a shopping spree, money in the hands of the consumers would infuse the economy with so much more positive activity than any amount of money given to those who have been receiving it up to this point. But it does leave plenty of room (money) for that purpose as well.
This is a difficult time for so many of us...the primary advertisements I hear on the talk radio stations are for "Debt Relief" organizations or bankruptcy attorneys! That does not bode well for anyone, at any level of society. And despite the hope that so many of us have at the election of Senator Obama as our next President, there is a growing groundswell of discontent at the same grass roots level that worked so hard to have him elected, not about Senator Obama, but about the whole system of government, business, banking, et al.
Our nation was founded on a lot of pretty straightforward principles, as misinterpreted or reinterpreted as those principles are. What is not left for a whole lot of reinterpretation, however, is the match that lit the spark to fire up the Revolution: the Boston Tea Party was a rowdy and violent act of some very infuriated citizens that were frustrated by the policy of "taxation without representation". And that's what this feels like to many of us. Our founding fathers universally believed in the ability and the responsibility of the citizenry to determine how they would govern and be governed, and lately, that seems to have been, if not forgotten, then at least ignored. Unfortunately, it is the ignorance of those who have been in charge that has gotten us here in the first place!