Hundred Power

In November, Bill Maher had a great line regarding the “financial fiasco”:

“New Rule: Hank Paulson must drop the $700 billion in bailout money from a plane and let everyone scramble for it on the ground. Sure, it’ll be chaos, but at least this way we have a chance of getting our money back.”

Yes, it’s a funny line. But, the satire does not need to stop with the
Paulson bailout.

Try this one. Since the 1970’s, every candidate for president, for the
House, and for the Senate has promised to deliver “energy independence”. That is, to reduce American dependence on foreign oil.

One part of the program was to establish some standard for gas mileage for a car manufacturer to meet. It was a standard for their “fleet” so the
company could still offer a range of cars. It sounds like a way to reduce
consumption of gas. However, the Congress then created an exemption for pick-ups. Later we find that the definition included the most gas-guzzling SUVs. Yes, a SUV is a “pick-up,” said the Congress.

And, then the Congress outdid themselves using the tax code. They gave an incentive for businesses and self-employed people to purchase gas-guzzlers. Thus, folks could take a 100% deduction of the costs immediately. For example, anyone purchasing a $75,000 SUV wrote off $75,000. In the highest tax bracket, that meant the federal government gave the owner $25,000 plus. And, the government borrowed the money from China to fund the giveaway for Americans to buy more gas-guzzlers.

Next, how about that foreign oil? Well, the Congress approves of going to war in Iraq to protect the foreign oil supply. World’s only superpower, you know. So, the federal government borrows more money from China to pay for that war. (Are we seeing a pattern here?)

And, guess what? The price of gas soared above $4 per gallon. Now few people want to buy such vehicles. Thus, the auto companies are losing money because they staked their success on gas-guzzling big-ticket vehicles. So what happens now? Well, the Congress says it has to bail out the auto companies. And, of course, to do that they have to borrow more money from China.

Maybe Bill Maher is actually on to something. Maybe throwing money from airplanes, or maybe from skyscrapers, should be discussed in Congress. All things considered, it might have cost America less.

In 1928, on his radio program, Will Rogers observed: “No nation in the history of the world was ever sitting so pretty. If we want anything, all we have to do is go and buy it on credit. So that leaves us without any economic problems whatever, except some day to have to pay for them,” he told America. “But we are certainly not thinking about that this early.” One year later, the stock market crashed big-time. Oh, yes, it rose to new records before finally settling to a new low in 1932. Stocks had lost 90% of their value.

Click here to contact your representatives in Washington, D.C.:

Our Elected Officials. Tell them you want a bailout you can believe in.

– Byron

References:

“Real Time with Bill Maher,” HBO, November 14, 2008.
New Rules.