Column for Oct. 2, 2008

Bailouts suck

As you may well be aware, the big buzzword in the news today is "bailout". The federal government has been busily creating financial bailouts for mortgage companies, insurance companies, and automobile manufacturers. I have been reading about and commenting upon the various maneuvers that the government has been concocting just within the last couple of weeks. On Monday, The House of Representatives surprisingly defeated a $700 billion dollar package to make the government the largest mortgage holder in the nation. The government has already been bailing out AIG, one of the world's largest insurance companies, and is making $25 billion in loan guarantees to the automobile industry.

Forget the fact that automobile manufacturers have been slow to adapt to the changing economy, to fuel efficiency customer mandates, and have been run into the ground by labor unions. Let us just look at the concept that we as citizens of the United States already support these same companies by our purchases and ongoing maintenance of their flawed products. Now we have to potentially pay for loans to these same incorrigible companies. GM, Ford, and Daimler/Chrysler have all floundered while Toyota has flourished. Because American companies have been too stubborn to change, U.S. taxpayers may eventually have to bail out loans made to these companies. General Motors is on the brink of insolvency and we are stuck paying for their mistakes? I am not much of a GM man, anyway. I have never really liked any GM product I have owned or driven.

Freddie Mac and Fannie Mae are government created entities. They wrote a lot of mortgages themselves and guaranteed mortgages written by other companies. Because of worries about risky mortgages, the United States taxpayer would have been on the hook for the reckless lending practices of mortgage companies that were spurred by government threats of regulation. People who had absolutely no business purchasing houses did so or bought more house than they could afford. Some in Congress along with President Bush wanted the rest of us to foot the bill with a purely socialist move, allegedly to save our economy. Personally, I believe it would have done more harm than good.

If Warren Buffet, the world's richest man and leader of Berkshire Hathaway found it to be a good move to buy Goldman Sachs as a private venture, then I am sure that many more such deals could be reached. If we can allow the private sector to operate in a truly free market economy without government intervention, then every issue could be resolved. Berkshire Hathaway is the epitome of success in such things. Their current holdings include Dairy Queen, GEICO, Helzberg Diamonds, The Pampered Chef, Clayton Homes, Fruit of the Loom, and many other fine companies.

Just looking at the AIG bailout of $85 billion dollars, I found the following. If we take that dollar figure and divide it by the entire United States population of +/- 301,000,000 people, then this represents approximately $282.39 for every man, woman, and child in the nation. Keep in mind that about a third are not even 18 years or older and are not tax payers. Even at that 18 years of age figure, a smaller percentage still actually pay taxes, so the figure is going to be higher per tax payer than that, but for the sake of argument, let's use that $282 figure. That figure represents approximately $44,458,634 to just Johnston County residents, based upon 2007 population figures.

Using the same methodology, the $700 billion package would have cost Johnstonians $366,132,558. The automotive bail out could cost every Johnstonian another $83 for a total of $13,076,162 from our county alone. Just these three bailouts alone would have impacted Johnston County potentially as much as $423,667,354. People, that is a bunch of money. The entire county's annual government operational budget is only $149 million by comparison. Keep in mind that that is based upon the idea of $x per capita, not per tax payer. When you divide out those figures, the total gets much higher per person.

When is this going to stop? I do not know. I guarantee that though the $700 billion bailout failed in The House of Representatives, it will come up again. We spend a bunch of money overseas in foreign wars, building foreign nations, policing the world, paying people to not work here at home, we pay farmers not to grow crops, and now the government is trying to pay businesses for failure. It all ends up on the backs of the United States tax payers. If we keep trying to save mortgage companies and mortgagees, we would have mortgaged the future of our children by saddling them with a huge debt with socialist policies and bad economic decisions. Whether through political courage or cowardice, at least one gigantic spending bill failed with a 228-205 vote to reject the bill. We'll see it come up again.