By TEDDYE SNELL
TAHLEQUAH DAILY PRESS — Treasury officials and congressmen are scrambling to find a viable solution to what been dubbed the worst financial meltdown since the Great Depression, and are tossing around figures unimaginable to most “regular folks.”
The latest amount being discussed in Washington is $700 billion, which would come at the taxpayers’ expense.
If the three-page act is passed as is, what would this mean to the taxpayer? Dr. John Yeutter, associate professor of accounting and Certified Financial Planner, explained the situation in layman’s terms.
“Let’s put this in perspective,” said Yeutter. “The U.S. Federal Government collected $2,568 billion in fiscal year 2007, while spending $2,730 billion, generating a total deficit of $162 billion. This proposal asks for more than 25 percent of last year’s collections. This is more than the government spent on defense ($549 billion), Social Security ($581 billion), or Medicare and Medicaid ($561 billion) last year. So we’re talking about ‘real money’ here.”
Yeutter indicated this money will come by increasing the federal debt, and will have to be paid back somehow.
“So our children and our grandchildren will have to pay for the mistakes of a few executives on Wall Street, through future taxes,” he said. “So we shouldn’t expect anything but tax increases until this debt is paid.”
Indeed, a review of the text of the bill, available at the New York Times Web site, provides a stark – some might say frightening – plan that would leave U.S. Treasury Secretary Henry Paulson in charge of running the whole show.
Particularly sobering is Section 8 of the three-page document, which states: “Decisions by the Secretary [of the Treasury] pursuant to the authority of this act are non-reviewable and committed to agency discretion, and may not be reviewed in any court of law or any administrative agency.”
If passed, not only would the legislation increase the national debt to $11.3 trillion, it would leave one man in charge with absolutely no oversight.
According to a report by the Associated Press, Federal Reserve Chairman Ben Bernanke warned Congress Wednesday they risk a recession if the plan is not approved immediately, as is.
Yeutter is concerned about the act and its potential long-term effects on other programs.
“We all hope that the government has the ability to stop what might be a crisis of similar proportions to that which brought on the 1929 depression,” he said. “The difficulty that exists here is that our lawmakers are being told, ‘Give us this blank check, or the economy will collapse,’ and the current proposal has little in it to provide protection for the citizen taxpayers who are funding it, or accountability from the secretary of the Treasury who will administer it. This also means the next administration, whoever that may be, will be left with less available funds to spend solving other economic or social problems, like health-care costs, health-insurance costs or education.”
The latest U.S. Census information indicates there are 116 million households in the U.S. – given that information, the cost per household for this proposal equals approximately $6,000.
What some may find even more disconcerting is there is no “Plan B,” should this plan fail.
According to Eamon Javers, writer for Politico magazine, if this week’s bailout plan fails, the government will probably have no choice but to continue to buy up assets, which could include credit-card debt, car-loan debt, as well as commercial real-estate debt, until the problem abates or taxpayers gain control over the banking system.
Neither Sen. Jim Inhofe, R-Okla., nor Sen. Tom Coburn, R-Okla., are comfortable with saddling their constituency with an additional tax burden.
In a statement released on his Web site last week, Coburn called for “sacrifice and statesmanship in Congress.”
“This is a time not just for bipartisanship in Congress but common sense, sacrifice and statesmanship,” said Coburn. “Before we ask American families to make further sacrifices, we need to make sacrifices of our own. Congress must learn the lesson of our current financial situation, which is that you cannot live beyond your means indefinitely. As a first step, members of Congress should put their pet projects on the chopping block and come together to eliminate billions in wasteful Washington spending.”
According to a Wednesday AP report, Inhofe said he wouldn’t support the administration’s bailout plan, and was the first member of Oklahoma’s congressional delegation to do so. Inhofe told the AP he wanted more accountability and oversight built into the plan before it’s approved. He also is concerned about the speed in which the administration wants the plan enacted.
“Anytime someone is in such a desperate hurry to get something done, I am always a little reluctant to be in the same hurry,” Inhofe told the AP. “It usually turns out that it is not a good idea.”
Area residents are also concerned, and some feel Congress has been left with little choice but to approve the proposal, including Luke Foster.
“I am always concerned about a government bailout, especially when the federal deficit is so astronomical,” said Foster. “But if the fallout of not bailing them out is worse than the price you pay for doing it, you really have no option. The key is to be conservative.”
Beth Herrington, local historian and retired educator, was a child during the Great Depression, and “shudders when supposedly rock-solid financial entities are in big trouble.”
“I am very concerned about the Wall Street bailout,” she said. “How did this happen? Where were the safeguards, if any? The tax burden will rest upon us for years and years. And there is also the ‘gut’ reaction from everyone, which means a trickle-down effect that causes the economy to veer up and down in mostly detrimental ways, in my estimation. When financial disaster faces Mr. and Mrs. Average American, the impact is the worst possible scenario for the country.”
Dr. Shannon Grimes, a local chiropractor, said many officials have warned of the perfect financial storm for years.
“Our government, and a private, for-profit bank called the Federal Reserve, are robbing responsible Americans to pay for the bad debt who made bad decisions,” he said. “Not only will they be robbing us now through taxes and debasing the dollar, they are robbing our children and grandchildren. By what morality do they think it is OK to saddle the future generations with such debt? Sadly, they likely are not thinking beyond bailing out some buddies and political expediency for a few votes.”
Grimes said the average consumer needs to move past politicians’ “feel-good rhetoric” and understand the underlying principles of the problem.
“As it is now, we already have about two-thirds of our nation’s mortgage industry nationalized,” he said. “Who is getting our money? No doubt, many in favor of these socialist wealth redistribution schemes have good intentions, but robbing my family, friends and neighbors with good intentions is still robbing them. Live frugally, my friends and neighbors, as we likely have more of this and related messes to come.”