Like Matt Yglesias, I think it is extremely important that we incorporate punitive measures into the eventual bailout legislation. After all, government subsidized welfare creates all the wrong incentives, and discourages good behavior. Not just in poor people remarkably enough. So unless there is pain associated with cocking up our economy so bad that a trillion dollar band-aid is needed, the “greed is good” set is going to continue gambling our taxpayer dollars in pursuit of high risk, instant gratification because, well, its not their money. And they’re greedy.
Reining in obscene executive compensation would be an excellent place to start (not just CEOs mind you, these entities have multiple tiers of executives). Even if such mean restrictions, sniffle, cause some banks to choose not to gorge themselves on my hard-earned tax dollars, served over a mesclun mix in the bailout trough.
But there are wider implications from this truly enormous budgetary expenditure that we will need to reckon with. For one, it will make it exceedingly difficult for Obama to implement badly needed, if expensive, legislative initiatives like health insurance for tens of millions of Americans that are suffering for want of care. Touching up the crumbling infrastructure wouldn’t be a bad thing (I prefer my bridges to remain intact while I’m traversing – I’m spoiled like that). Oh, and treating the global warming crisis in an adult manner will likely involve some financial costs. But consider this: Wall Street, situated roughly at sea level in lower Manhattan, could literally disappear from the effects of Global Warming. Kind of changes the meaning of “underwater” don’t it.
Further, tacking this trillion dollars of debt on to the ten we already got will bring the filthy tax jihadists like Grover Norquist that much closer to achieving a goal that has been a preoccupation of the GOP since the days of FDR: Getting the Wise Men in Washington to come together for truly sensible, deeply serious entitlement reform (translation: gutting Social Security and Medicare – drowning each in the proverbial bathtub). The politicians will explain to the American people how they have no choice. How the money simply wasn’t there. How deficits do matter after all. How they had to do it. Sadly. There will be no mention of Iraq, the Bailout or Bush’s mind-boggling tax cuts for the already-super wealthy. That would be finger pointing and just as now, it will not be the time for finger pointing then.
Yglesias touches on one means to evade the trap as set:
If anything should be done, the case seems clear for wildly higher tax rates on high-income individuals than prevailed during the Clinton years. Are we afraid of stifling the kind of fat cat activity that’s brought us to our current situation?
In the alternative, we can help to defer costs by outsourcing our punitive measures-related-program-activities to India. They have a cost-effective methodology:
Corporate India is in shock after a mob of workers bludgeoned to death the chief executive who sacked them from a factory in a suburb of Delhi.
My friends, the choice is simple: death or taxes.