My intent was to spend a significant amount of time on this post, do a bunch of research and publish it tomorrow after President Obama releases his plan to assist people with troubled mortgages. Yea, I can’t wait.. basically my mind is occupied, and very annoyed with, what is going on in the government at this point. This includes both parties. With all the money is being thrown around, with all the waste going on, I want to know where our F&#!ing bailout is!
The Trouble Assets Relief Program (TARP) enacted by the Federal Government last year has turned out to be a huge waste of money – $700 Billion dollars to exact. The whole idea of the program was that good old Uncle Sam would provide the money, either by direct investment in a corporation or insuring of troubled assets, in order to stabilize financial institutions. The execution of the TARP, however, was an unmitigated failure at most, very problematic at least.
As of 02/09, the TARP money has been allotted in the following manner:
- $250 billion pledged for purchases of senior preferred shares and warrants in banks and thrifts (direct investment)
- $20 billion pledged for Bank of America in addition to $25 billion pledged under the direct investment program listed above
- $20 billion investment in Citigroup
- $40 billion investment in troubled insurer American International Group
- $20.9 billion to prop up the U.S. auto industry (GM, GMAC, Chrysler, Chrysler Financial)
- $20 billion pledged to cover potential losses for a Federal Reserve program aimed at improving consumer access to credit.
Guess what? TARP has done very little in terms of changing… well… anything. Had the program followed the original plan – the formation of a bank to take troubled assets – the financial institutions in the U.S. would look significantly different at this very moment. The problem is that those overseeing the original TARP program realized they did not have the funding to support such a bank after the got approval to put their plan in motion.
The credit markets are still basically frozen as banks continue to crank down on available credit. As a matter of fact, lending by the top banks in the U.S. actually fell 1% over the last 4 months. Losses at Bank of America and Citigroup were so large that they needed to go back to the federal government for more money. GM needs an additional $16.6 Billion, a good $17 Billion more than they originally stated they needed to fund operations, if they have any hope of staying alive.
So much for that plan.
Seeing the government has had so much success with the TARP, why would the general public expect the execution of a stimulus plan to make a significant impact on the economy? Who cares if it will or will not, right? Let’s pass a $787 Billion dollar stimulus plan anyway…. a plan that has… a lot of money for a whole lot of nothing.
I don’t have the time to break out all the spending, but you can read the bill here and here.
Based off of what I’ve seen there is very little “new spending” in the bill. For the sake of argument let’s say the “new spending” included in the bill is divided up between the states that need the funding. These states then distribute the money on infrastructure projects. How many IT professionals, finance majors, office workers and the like, who lost their jobs, are going to be building bridges and rebuilding road? How many corporate procurement managers will be able to install those solar panels? Really, how many people will this impact?
My guess is very few. But, let’s take it a bit further.
There will be an $800 tax credit for couples (married couples that file jointly, making under $150K a year) or a $400 tax credit for individuals (making under 75K a year). Oh, by the way, that credit includes people who DO NOT PAY TAXES. The IRS will mail checks to individuals who do not pay income tax due to low/no income? Kinda hard to give someone a “tax cut” if they don’t pay taxes, isn’t it?
So where does this leave me?
I’m decidedly middle class which means I fall outside of the eligibility limit set by the government… so I will not be getting a tax credit. Obviously I am not a giant bank, so I am not getting anything there….But let me get this straight. The financial institutions have money thrown at them, they continue to fail, and the government continues to support them. Here, I am paying my taxes – which end up supporting those financial institutions – and I cannot get any type of consideration?
Ok….
The government is providing a “tax credit” to people who DO NOT even pay taxes AND I GET nothing!?!
How is this fair? Let me get past the anger, no rage… I don’t like that idea. It’s socialism, plain and simple, but for the greater good (and I only say in such an extreme case) I can get on board with the idea. As much as it goes against my principles, I can still get on board as I would much rather see the survival of the United States than total anarchy in the name of a personal view.
So far my tax dollars are supporting major corporations and the nations poor but the government and I get nothing. Where is my help on what I need – my property value.
My condo value has fallen so much that I am now roughly anywhere from 60K to 90K “in the red” on my mortgage. While President Obama is expected to announce a mortgage relief program tomorrow, to help those who face foreclosure due to the inability to pay on their mortgage, it appears that there will be very little to assist families that are significantly “in the red” due to property value declines.
Just to recap…
- Money goes to companies that continues to fail
- Money goes to people that do not pay taxes
- Assistance is provided to those who are facing foreclosure but not those in the red due to property value decline
[NOTE: 2/18 - The news coming out today is saying the Govn't will help people underwater by using cash to refi their mortgages. Depending on the info point #3 may change... and my frustration may be defused]
[NOTE #2: 2/18 - Read the impact of the bill, no... didn't defuse my frustration.]
How is this fair to me? How is this fair to the countless other middle class families and individuals facing the same situation, the countless households in this nation that have continued to pay their bills and taxes, even in the hardest of times?
It’s not.
Where is our F&#!ing bailout?
I understand the economy is facing more and more difficulty and that there is no plan that can address everything, but the segment of society that is actually footing the bill – and that is hurting as well – is the group eventually facing pain. The fact no relief or consideration for the individuals actually paying for everything will come back to haunt the government when this segment of society faces large layoffs (more so they they are now), which will trigger an even large wave of bankruptcies and foreclosures.
The shortsighted call to “help the poor” and “the corporations” will create a pressure on the middle class who will be unable to sustain funding the rest of the nation. If we are a lucky nation, and I fear that we are not, the United States will be able to get past this economic event on shoulders of the middle class. If not, the nation will face a depression longer and deeper than anyone had expected. Once the back of the middle class is broken, and there is no where else for the government to find the tax revenue, will the economy face capitulation and a true bottom to the recession will be called.
Things are going to get a lot worse before they get better…