The Bailout

The more I read about this bailout, the more terrified I become. I mean, this is a lot of money and not a lot of accountability. Obviously no one fully understands this thing, but from various things I have read, the bill:

• allows for spending about $150 billion above what is actually necessary,
• allows for $700 billion in spending at any given time - but that is not the total cap on all cumulative spending, and
• places the undetermined (uncreated?) agency administering the bailout above the law and not answerable to anyone.

All this for a bill that may or may not be necessary (see the various discussions on Marginal Revolution and Cafe Hayek about current lending continuing to go strong).

I do commend the GOP for finally getting up gumption to ask some questions about this bill and to slow the process down some. And I do commend Barack Obama for admitting that if this deal goes through it may cause him to limit or delay some of his own far-reaching proposals (which ought to give you some idea of just how much strain those big-government proposals will put on the American economy and should make any thinking person ponder the economic sense of voting for Obama).

Into the mix I throw an idea - instead of all of us bailing out a few companies, how about we let all companies give less to the government? Let's pass a two-year suspension of the corporate tax, which is currently either the highest or the second-highest in the industrialized world - take it to 0% effective immediately and retroactive for all of 2008 and through 2009. Then corporations can then use the money to grow and bail themselves out instead of being given a handout and tacit assurance that no matter how bad it gets, they'll be ok.

I'm not a tax expert so I don't know how much that actually goes toward the $700 billion mark, but I feel like it's a much more practical way to help corporate America. It helps everyone and allows an unaccountable government to touch less hard-earned money.

NB: My friend tells me that this really doesn't do much for the liquidity problem the banks are facing. Fair point. My hesitation here remains the government buying all those assets is a risky bet in the short term and a dangerous precedent for our free-market economy in the long term.