Newsweek magazine published the following headline on the cover of its February 16 issue: “We Are All Socialists Now: The Perils and Promise of the New Era of Big Government.” Of course, it’s hard to imagine that we have only now entered the era of “big government” — weren’t we there already? But there is no doubt that both money creation by the Fed and spending by the federal government are accelerating to finance the proliferating bailout and stimulus programs.
The Labor Department’s Bureau of Labor Statistics announced good and bad economic news on May 7: The economy added 290,000 jobs in April compared to March, but the unemployment rate climbed from 9.7 percent to 9.9 percent.
The Competitive Enterprise Institute filed a complaint with the Federal Trade Commission on May 4, saying that General Motors is misleadingly claiming in a TV advertisement that it has already paid back its government loan in full.
“President Barack Obama threw a $75 billion lifeline to millions of Americans on the brink of foreclosure,” the Associated Press reported after the president’s February 18 speech in Phoenix, Arizona, where he unveiled his solution to the mortgage crisis. But the “lifeline” Obama threw comes at a cost, since the government does not create wealth (though it does create money via the Federal Reserve), and the $75 billion that will be spent to “rescue” beleaguered homeowners will have to come from the American economy.
Will the banks be nationalized? That question would have seemed preposterous prior to the $700 billion Troubled Asset Relief Program to bailout major financial institutions. But with the TARP money comes federal control, and that control could be strengthened to the point of full-blown nationalization, particularly if the already congressionally authorized $700 billion is deemed insufficient to “rescue” the banks.
"Madame Speaker, only in Washington could a bill demonstrably worse than its predecessor be brought back for another vote and actually expect to gain votes," Congressman Ron Paul lamented on the floor of the House on Friday, October 3, the day the gargantuan financial bailout package was passed by the House, completing congressional action.
Two days after the House rejected the mammoth $700 billion bailout bill, the Senate passed it. Not surprisingly for those who understand the world of realpolitik, Senators John McCain and Barack Obama both voted for it.
These days President Bush and the managers of our monetary policy sound like prophets of doom when they talk about the economy. "The government's top economic experts warn that without immediate action by Congress, America could slip into a financial panic, and a distressing scenario would unfold," President Bush claimed when he addressed the nation on Wednesday, September 24.
President Barack Obama’s statement last Friday that we’re “starting to see ... glimmers of hope across the economy” has gotten quite a bit of publicity. What has gotten less coverage is the president’s rationale for being so optimistic in the face of bad economic news such as the unemployment rate, which rose to 8.5 percent last month, the highest unemployment rate in over a quarter of a century. (This figure does not take into account long-term unemployed who have given up looking for jobs.)
The American people are understandably outraged to learn that the American International Group (AIG), a corporate giant that has received almost $200 billion in total TARP/TALF funding, has recently paid $165 million in retention bonuses to its top executives. The fact that these payments were made to fulfill already-existing contractual obligations and that most of the recipients have reportedly indicated a willingness to return the money has not done much to quell the public anger. After all, a company in such dire financial straits to require vast infusions of federal bailout funds should not be giving its employees millions of dollars in bonuses, period.