This Bailout Farce

If you were to select a word of the year for the nearly-concluded 2008 it would probably be "Change," the ever vacuous and open-ended term that was the byword of the Obama campaign and was used to encapsulate the desire of the American electorate. If you had to turn the dime though and predict the word of 2009 it would be a safe bet to go with "bailout." The term is ubiquitous in political discussions today as the Democratic majorities in Congress and the administration-to-be contemplate bailouts for all manner of entities in this declining economy – the auto industry, the deficit-ridden states, and the country as a whole in the form of a massive stimulus package.

The economy is in a state of extremity, or at least perceived to be, so it is no surprise that the powers that be, desperate to demonstrate they are doing something to solve the problem, are preparing to take extreme measures themselves. In this maelstrom of hysteria we are losing our senses though. The reasons that Detroit and most of the states are so deep in a fiscal quicksand is because they have put themselves there, awarding ridiculous labor compensation that makes them uncompetitive in the case of the former and spending ludicrous sums of their residents' money in the case of the latter.

Throwing federal dollars at them will do nothing but temporarily alleviate the symptoms of an underlying sickness. It will neither rework their business model to make them competitive nor cut their unsustainable and profligate expenditures to balance their budgets. This they need to do on their own, and they are the only ones that can. Ultimately the federal government cannot help them, but it can waste a lot of money trying, which is the added tragedy of this growing farce. Spending money it does not have to give to other entities so they can spend in a manner they couldn't otherwise afford is going to catch up with us sooner or later, and when that day comes whom will be the ones to bail us out? Who are we going to turn to when this country has to satisfy the exorbitant unfunded obligations our government has incurred over the decades?

The federal government is ignoring this nagging question, exacerbating our long-term financial problems for short-term band-aids and political gain. In so doing they are not only kicking the can down the road a little further but also shortening the road still left to kick it down.

Somebody needs to stand up and end this before we sink ourselves. Instead of wasteful bailouts that will not work, the entities demanding them need to get their own house in order and come to terms with the self-created problems that have brought them to pathetic supplication. The federal government needs to do the same, drastically reforming the institutions that we are slowly realizing we can't afford (and never could). And if we want to restore the long-term health of the economy we ought to take our medicine for the national pandemic of reckless lending and borrowing that brought us here and then foster the conditions requisite for economic recovery, which will not be defined by blind, arbitrary government adventurism deep into the wilderness of the economy.

This farce will be over when all of that happens.