Business' Bail Out Queue Keeps Growing

By Steve Stanek

How taxpayers are footing the bill

Heard enough about bailouts? Now comes the news that commercial real estate developers-people who invest in office buildings, hotels, shopping centers, and the like-want to jump on the federal government's bailout bandwagon.

A partial list of those that have received or have asked to receive taxpayer money in the past few months includes domestic automakers (who recently received a pledge of $17.4 billion from President George W. Bush and Treasury Secretary Henry Paulson, with more to come a near-certainty), state governments, local governments, telecom companies, car rental firms, ethanol producers, equipment leasing companies, and even the American Library Association.

This is exactly what critics of a federal bailout of financial institutions said would happen. Offer someone a pile of money, and before long lobbyists would be lined up the length of Pennsylvania Avenue, hat in hand.

This torrent of demands on our money has already resulted in the federal government committing more than $8 trillion in loans, loan guarantees, handouts, giveaways, and other measures to government-sponsored mortgage companies such as Fannie Mae and Freddie Mac, the world's largest insurance company (AIG), scores of banks, and others.

Most of the focus so far has been on the laughably named Troubled Asset Relief Program, a $700 billion pile of our money approved for spending by lawmakers last October. The name is laughable because the program's original intent, as described by Paulson, was for the government to buy the troubled assets of financial institutions, thus injecting money into the firms and removing the bad assets from their books. This, in turn, would free the companies to start lending money.

Or so he said. Paulson has instead used the money in other ways, including buying equity stakes in firms that were not in financial trouble. Within two months Paulson had spent half of the $700 billion. Money-hungry businesspeople none too proud to take federal handouts are lustily casting their eyes on the rest of the golden egg.

And why shouldn't they? No one has had to account for the first $350 billion-not Paulson or Bush or any of the firms that have received the money. Wouldn't you like someone to give you a few billion dollars to use however you like, with no one asking what you did with it?

The problem is, whatever the government gives, it must first take. To give money to A it must take money from B. Or it must borrow money for A, which means B will have to repay it later, with interest. Or it can print money and throw that into A's coffers-and the growing supply of dollars causes inflation and means people need more dollars to buy the same amount of goods.

As the government bails out some businesses and industries, others line up for their share. They are probably smart to want to be on the receiving end of the government's largesse ... but they want you and me to be on the paying end. And that smarts.

Steve Stanek (sstanek@heartland.org) is a research fellow at The Heartland Institute.

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