In a move that should surprise no one, Treasury Secretary Henry Paulson today back-pedalled on the centerpiece of the Bush Administration’s unConstitutional bail-out for irresponsible banks and borrowers. With $700 Billion bilked from the taxpayers in hand, Secretary Paulson has decided that, well, buying troubled assets isn’t such a good idea after all.
At the end of September, Mssrs. Bush and Paulson painted a doom-and-gloom scenario where everybody’s ability to borrow money for houses and flat-screen TVs they couldn’t afford was in jeopardy.
The situation was so bad that we didn’t have time to consider free-market alternatives that might actually address the root causes of the newly discovered financial crisis. No, no, no! Taxpayers had to cough up $700 Billion immediately.
Why $700 Billion? “It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com. “We just wanted to choose a really large number.” Well, they succeeded there.
House Republicans balked, and briefly staved off Leviathan. The Bush Administration kept up the doomsday talk; some compromises were reached; the Senate caved, and the House followed suit.
And now, the “really large” plan that was so important we didn’t have time to think it through isn’t such a great idea after all.
So is the government going to give the money back to the people who earned it? Don’t be silly. The Administration is launching a “broader campaign to bolster the financial markets and … make loans more accessible” to people who want to purchase cars or other items they can’t afford. Oh, no.
Now, if the Administration has decided not to spend the tax-payers’ money on bad investments, that’s a good thing, as far as it goes. Using it on a vague campaign to encourage greater debt, on the other hand, is a bad thing.
But more to the point, the Administration should have considered its proposal thoroughly, and allowed Congress to do the same, before foisting it on the productive citizens who have to pay for it.
Part of the mystique used to market the bail-out was that such government meddling would somehow restore public confidence. This Ready-Fire-Aim approach does the opposite.