Bailing out cities–What’s next?
Someone is really going to have to explain this one to me. First, we started off by bailing out individual companies, supposedly for the good of the economy. Our government told us we had to do it because the consequences would be dire if we didn’t. Then we went to the banks and we know the three major automobile manufacturers have their hands out as well. I thought that would be the icing on the cake, but it looks like the cities of America are topping even that. According to The Associated Press, mayors of three major cities are asking for their fair share of the $700 billion bailout.
Three big city mayors asked the federal government Friday to use a portion of the $700 billion financial bailout to assist struggling cities.The mayors sought help with their pension costs, infrastructure investment and cash-flow problems stemming from the global financial crisis.
The mayors—Michael Nutter of Philadelphia, Shirley Franklin of Atlanta and Phil Gordon of Phoenix—made their request in a letter to Treasury Secretary Henry Paulson.
Nutter said cities are facing an economic crisis not seen since the Depression and need help just like financial institutions.
“I want to make sure that cities and metro areas are at the table, that their voices are being heard, that our challenges and problems are well understood, so that we can get relief,” Nutter said.
With all due respect to everyone concerned, the United States Treasury is not an “all you can eat” buffet. I understand all too well that our economy is in very bad shape. Because of that, the automotive repair shop I work at has slowed down a lot. The business simply hasn’t been there for the last month. The owner has refused to lay off employees, choosing instead to cut work hours to 40 per week. His idea is simple, that the business will pick back up and he will have a work force in place when the repair business gets back into full swing. I admire him for thinking this way, instead of arbitarily laying off workers. It has been hard and I have lost about $150 per week in wages. However, you do not see him with his hand out, trying to get money from the federal government and that same federal government certainly has not offered a helping hand. Instead, he is dipping into his retirement in an effort to save his business and by proxy, our jobs.
Even more troubling is the fact that AIG has received more bailout money, despite the fact that they continue to provide bonuses for their executives. From The New York Times:
The officials said they had chosen to freeze the A.I.G. bonus pool, rather than eliminate bonuses altogether, because the company needed the flexibility to retain its existing management.
Even as the government works to solidify A.I.G.’s finances, elected officials have been demanding a fuller accounting of the company’s business practices and executive pay structure. The arrangement announced Monday requires that A.I.G. limit executive pay and perks and freeze the size of the annual bonus pool for the top 70 company executives. In October, the New York State attorney general, Andrew M. Cuomo, reached an agreement forcing A.I.G. to freeze payments to former executives.
“I find it hard to conceive of a situation that you could justify a performance bonus for management that virtually bankrupted the company,” Mr. Cuomo said after the agreement was made.
Did you read what the quote said? They are freezing the bonus pool, but not eliminating it because they are afraid of losing too many executives. That still allows them to give millions of dollars in bonuses to executives who have helped drive the company into the dirt. That just doesn’t make sense, to give a bonus to someone who has mismanaged or mishandled their job. It is indicative of the greed that is so prevalent in the corporate society in America.
So, the question still remains. Who will we bailout next?
That’s my take!
Larry
there are some states pulling their chairs up to the table as well to cover their expenses (such as California).
You know, I realize these are hard economic times, but it seems like they are taking care of everyone but people like you and me. I am not convinced that’s the way it is supposed to be.
Both parties seem to have throw limitted government and free markets out the window… Luckily there are still a few of the GOPers willing to speach out against the bailouts…
The “initial” wall street bailout was $700 Billion. I heard a story the other day that credit card debt in the US is $900 Billion. So, for $200 billion more, they could have paid off everybody’s credit cards, which would have reduced their monthly expenses and helped them keep their homes. I just wonder what that would have done for the economy. (I’m sure there are all kinds of experts that would tell me I’m nuts, but I still think it’s an intriguing option).
Tam,
Yes, they seem intent on driving our country into the dirt, financially. I will bet you money they don’t cut their own salaries.
Kerry,
That is a unique idea and a much better one than bailing out these companies, just for them to be able to give bonuses to the very people who bankrupted them in the first place.
Mike Huckabee has said all along there are ways to stimulate the economy, such as investing in the infrastructure of our country. That’s what he did in Arkansas and it does work.
OneMom – I have a few problems with your idea. In many cases (not all but many) by irresponsible people living beyond their means, so nut sure we should reward them. Also, those of us that were responsible and didnlt run up CC debt will be paying for those who did.
Larry – no way will they cut their salaries. Why do the repsonible thing when one doesn’t have to?
It wouldn’t help to pay off the credit card debt if they didn’t make the people cut up those cards to go along with it. Most people would just rack up that card debt again after the government paid it off.