The Bailout Conundrum

One thing Matt Miller, yet another self-identified opinion journalist does not say is the 1st stimulus has well over 357 BILLION dollars yet unspent.
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Simple question; Why wasn’t money taken from this pot of money, the 357 billion Democrat Party slush fund, instead of creating even more debt with this new 2nd stimulus of 26 billion dollars?
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Care to ask Miller that question, Joe Klein?
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Now here is MY opinion. While George Bush II drove the car into the ditch, instead of Obama digging the car out, he has simply dug a hole around the car. He is still digging, deeper and deeper. Eventually like one of those big holes-in-the-ground, the car Bush left behind in a small ditch will be swallowed up whole and never seen again.
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Joe,
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If we keep bailing out the States and the Unions, they will never feel the pressure to actually make the tough reforms necessary.
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Reforms must be made but no one has the courage or willingness to do them if there is a way around them.
It’s human nature to take the path of least resistance.
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No reform will take place until there is no other alternative with means no more bailouts.

Rusty — I think I know the answer to your question. When Congress appropriates money for spending, it almost always sets certain conditions or limits on that spending. As a typical example, if Congress appropriates a given sum of money for purchase of an aircraft carrier, it can only be used for that purpose. Also, money appropriated for expenditure during a given period (usually a single fiscal year) must be spent (or at least obligated for spending) in that period. With all the different conditions Congress can impose (I’ve hardly scratched the surface), federal fiscal law has become complex and daunting, though it still doesn’t come close to tax law in that way
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I haven’t read the stimulus act (I don’t have insomnia), but if it’s as long as was reported it probably sets all sorts of limits on the spending of the money it appropriates. And let’s not forget that a big chunk of that stimulus was tax cuts, which by definition involve no appropriations. So it may well be that there’s no money in the stimulus to cover what this new $26B covers. Granted, Congress could in theory repurpose money appropriated for the stimulus, but it almost never repurposes significant amounts of money.
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And let’s not forget that the new $26B is paid for by the closing of some tax loopholes, so that the net transaction is zero dollars and the deficit is unaffected.

Why no mention of Governor Sanford accepting of stimulus money he vowed to reject? Such hypocrisy must be exposed. Another republican who says one thing while doing the exact opposite.

If this is the case, why can state education budgets be slashed while maintaining the entitlement spending? Programs like Medicaid are built such that cutting them is political suicide, so all other spending will take lower priority to these programs. While the bailouts must be ended, what happens to the states until the reform (which is not a short process by any means)?
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Would now not be the time to, as done in the past, attach a condition of reform to the stimulus money that the states are so eager to snatch? As we cannot honestly say that the status quo will bring about the needed reform, until it is a reality the short term impacts of letting the state budgets fall cannot be ignored.

states have much less financial flexibility than the federal gov. it can take quite a while to enact reforms in response to changes in revenue or expenditures so a bailout to save jobs from short term emergency cuts is necessary to buy them time to tackle the long-term threats

bobell:
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Thank you for writing not only a rational explanation for why we are in such dire straits, but also why the Federal Government has grown way too large and needs to be cut at least in half in all programs it so inefficiently manages.
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Outside of specifics to a spending bill or not, you gave a complete justification for why the Federal Government is way too big and needs to be stopped immediately.

California=Proposition 13

newf@1,2~
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Despite a popular cry that government programs are managed inefficiently (and, the usual claim or inference that this is in comparison to privately-managed programs), I wonder if it is really true?
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For instance, take a look at this recent artticle on Social Security in the Los Angeles Times:
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http://articles.latimes.com/2010/aug/08/business/la-fi-hiltzik-20100808
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Also, I have a friend who is a physician and recently sold his practice of 27 years to his local hospital, citing over a million dollars in revenue last year and one-thousand dollars in profit. Reading of this in the local newspaper, Lars Larson put my big-game hunter, fisherman friend on the air, to substantiate Lars’ “government is too wasteful, it sucks up too much in administrative costs, and thus needs to be smaller” position.
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What he got, instead, was an explanation that my friend had done quite well for himself billing Medicare for decades — that while, yes, bureaucracy had its inefficiencies and frustrations, the private insurers were far worse. He cited something like a 3.8% (or was it 6.2%, either way on that order) administrative overhead for Medicare, versus a 20% right-off-the-top skim for corporate heads and also the costs of failed investments in Bernie Madoff s schemes, the difficulty of reaching anybody truly in charge at private insurers in order to complain about service or payment (versus knowing where his congressperson lived), and denials of services by private insurers for his patients that his Hippocratic oath compelled him to have paid for out of his own pocket.
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I am not an expert on this confusing subject, and you may not be either, but these are a couple of things to think about, don’t you agree?

swissArmyBrainBETA,
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“..states have much less financial flexibility than the federal gov..”
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Absolutely correct.
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States have to be concerned about people and businesses moving across boarders if taxes get too high or if government services are insufficient.
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When I say “government services” I think of roads, law enforcement, prisons, courts and aid to cities and towns for such.
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If the roads are riddled with potholes, even if the taxes are lower than the next state or if the schools in the cities or towns are awful, the population moves away.
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If the taxes are higher many businesses and people move away.
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Seventy five years ago many upper income or middle-upper income New Yorkers started making 35 to 55 mile commutes to Connecticut since Connecticut had no state income tax until something like 1990. This meant New York State had to balance with New Jersey and Connecticut how high they could make their taxes while, without a commuter tax (which has been on and off for the New York City and State income tax) people out of state could get a free ride- cheap subway rides, expensive road maintenance and suburban tax rates.
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This, among other things, ties governor’s hands in a way that the presidents and congress’s hands are not tied.
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I am not sure if that type of situation is what you had in mind, but, it is an example I can think of supporting what you said.
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On an even smaller scale, mayors, relative to governors and presidents really, really have their hands tied.

newf~

I was quite enlightened, impressed, and ironed by your post that began this comment thread. First, I quote you:
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“Now here is MY opinion. While George Bush II drove the car into the ditch, instead of Obama digging the car out, he has simply dug a hole around the car. He is still digging, deeper and deeper. Eventually like one of those big holes-in-the-ground, the car Bush left behind in a small ditch will be swallowed up whole and never seen again.”
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Impressed, because you really did criticize a Republican that almost all of the people in Swampland that you complain about for bashing Republicans love to bash. Gotta’ give you a lot of points for that!
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Enlightened, because your allegory seems to suggest that you view the “ditch” that W drove us into as a small one.
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Ironed, because you appended a visual aid concerning the subject of a sinkhole opening up in California.
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You see, I view not that ditch, but a sinkhole. I see that NO ONE, not even Bush and Cheny and all the King’s Men, could have simply dug the car out of it. Like a mine in unstable ground, first one must dig a larger opening than will be needed to conduct the main rescue event in, and shore up the walls. Otherwise, when one brings in the crane to snatch out the car, the walls will collapse, and the weight and vibration of the crane nearby might quicken the floor, activating the rest of the sinkhole.
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I used to think that you and I probably shared the same opinion that the risk of the walls collapsing and the sinkhole opening should have been taken, instead of throwing more of our grandchildren’s money away to shore up the walls of a diseased landscape that we already spent the previous decade throwing a bunch of their money at to accelerate that disease to epidemic status, like fuel on a fire. But I thought it was because we shared the opinion that the corrupt and greedy “market” and corporate welfare abusers deserve to take their losses when they foolishly gamble and lose, instead of getting public rescue. I thought you, like me, thought capitalism means winners profit and help the less fortunate with those profits, and losers that tried to cheat or steal or pollute to win lose their shirts. I thought you, like me, abhorred the corrupted, semi-socialistic form we have had here in America ever since the Reagan years, where big enough businesses to afford great lawyers or people who were in the right fraternities, when they win keep all the spoils, and when they lose, society picks up the tab.
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But now I suspect that you may have merely felt that the hole that would have collapsed would just not have been that big — that no one would have gotten hurt very badly. I guess that means that we can only know that I am uncaring about such egregious manipulators becoming very hurt as a consequence of their actions, but I can infer no such thing about you. Whereas I wished I had been the one holding that sign in front of the NYSE in October of 2008 that read “Jump, f**kers!”, I can no longer feel sure that you would not have wanted to be there to buy up their shares and take their place.
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Or maybe there is another explanation, But this one starts to help me make sense out of the talking at cross-purposes I have continually felt here between you and others around this subject.