After Congress approved a so-called "rescue plan" for the financial industry during early October, one could not help but wonder how long it would be until other industries facing hard times would also come hat in hand to Washington for help. Before the month was out, bad news started coming out of Detroit, the center of the automotive universe. The Big Three (General Motors, Ford, and Chrysler) are running out of cash at a time when auto sales nationwide are falling off a cliff. Sure enough, the lame-duck Congress (so called because it includes lawmakers who are retiring or were defeated in the recent election) is considering a $25 billion bail-out plan for Motor City. The automakers, who have already gone to Washington hat in hand, have been asked to deliver plans showing their viability.
The Bush administration and the Federal Reserve announced on November 25 almost $800 billion dollars in additional funds to help, bail out, or otherwise prop up the financial sector, bringing to nearly $7 trillion the total sum that the federal government has thus far spent or pledged to spend in its feckless efforts to spare America's largest corporations from insolvency. Included in the latest package is $200 billion for the purchase of securities backed by many different kinds of loans, including student, credit card, auto, and small business. Such loans have become much harder to obtain in recent months, and the Fed's action is intended to get credit in these areas moving again.
Vice President Dick Cheney infamously informed former Treasury Secretary Paul O'Neill in 2002: "Paul, Reagan proved deficits don't matter." Now comes news that bailout-mania combined with already out-of-control domestic spending and foreign wars may lead to the first-ever trillion dollar deficit during the current fiscal year.
The enactment of the now-notorious $700 billion bailout package did not stop the downward slide of the stock market, as its proponents had promised. Recall that when the stock market took a steep drop on the day the House rejected the first bailout bill, hysteria-mongers on Capitol Hill and in the news media warned that that steep decline was a harbinger of things to come unless a bailout was passed, and quickly.