In today's news and media climate it is a rarity to go back and follow up on the headline toppers of yester-month. Case in point: how long ago does the Blagojevich scandal seem already? Exactly, and that was only 6 months ago! Time flies when you're having fun right? I ask you to indulge me in recalling one of the larger headline toppers for just a few mere months ago. I am of course talking about our first $700 billion bailout package.
As you may recall (and for those who don't) The Emergency Economic Stabilization Act of 2008 or the "bailout" was passed in October of 2008 when the damage done by the bust of the housing bubble was really starting to show its severity. The extension of credit to individuals, as well as businesses large and small alike came to a screeching halt. These businesses were at risk of not making payroll. Individuals couldn't get loans they needed to buy cars and homes regardless of credit rating. The banks just didn't have the cash to give out.
The $700 billion dollars was supposed to solve this problem. It was split into 2 halves and placed into a fund called the Troubled Asset Relief Program. The first $350 billion was to be used immediately by our then president George Bush to get the ball rolling ASAP to get the credit market flowing again, and the second $350 billion was to be saved for later use by the Obama administration.
I would agree that this all seems logical so far, but what happened next was not what was sold to the American people who at the time were not very happy with this legislation. The banks after receiving their TARP funds did not use that money to lend out to the individuals and businesses. They used it to take advantage of the shattered stock market and buy up weaker struggling banks instead! This was because the money was given to them without provisions in place to ensure the money was used appropriately. We sacrificed oversight for expedience. Remember the speech the president made prior to the passage of the bill threatening the deterioration of our way of life up to even martial law?
To those that would argue that speed was needed because of the severity of the crisis I say look at the Europeans. The European Union passed a very similar program as they were experiencing a slowdown in the credit market, but there was one difference. They put in a provision that stated the banks had to use the funds they received to lend out to individuals and businesses. Can you guess what they did? That's right! They lent it out!
What bothers me the most about this whole fiasco is the simple fact that people aren't outraged after the fact. In my opinion this was a robbery of the American taxpayer. There are some that will take that statement as overreaction or hyperbole, but before you dismiss it as such let me present this. Take a moment if you will to put the sheer amount of money that has been given out in perspective. Bianco Research has conducted a study where they have taken a look at the large expenditures that government has made over the years, and adjusted them for inflation:
The Marshall Plan - Rebuild much of Europe after WWII it cost $12.7 billion in 1948 adjusted for today it would be $115 billion.
The Louisiana Purchase - Purchased entire states from the French in 1803. Back then it cost $15 million. Today that would be $217 Billion
The Race to the Moon - Racing the Russians to the moon in the 1960s cost us 36.4 billion. Adjusted for today that's $237 Billion
The Korean War - In 1950s monies cost $54 billion. Today that would be $454 billion
The New Deal - Passed by FDR to end the great depression cost $32 billion back then. Adjusted that is $500 billion.
The Iraq War - no adjustments really needed. We have spent around $600 billion there already and rising.
Vietnam - Vietnam cost us $111 billion. Adjusted for today is $698 billion.
And here's a fun one.....
NASA complete funding since its inception in 1958 including all research production and mission costs has put us back $416.7 billion. Adjusted for today: $851.2 billion
Judge for yourself. This was the largest transfer of taxpayer funds to private companies, and they didn't do what they were supposed to. I guess Octo-mom and Chris Brown are more important in the news cycle these days.