If banks don’t get their criteria for loans tightened this may have to happen to make sure that the population still has faith in the US banking system.
An article in The Wall Street Journal is talking about GM seeking 16.6 Billion more dollars in U.S. aid. The question arising in my mind is with them already receiving a portion of the pre-allotted auto industry bailout, why do they need more? It seems that companies are using the United States Stimulus package as a bargaining chip. GM has announced that they will be cutting 47, ooo jobs, they are going to be cutting 3 lines of vehicles (Saturn, Saab, and Hummer), these things are all being said to justify them asking for more. With talks of all this money floating around it seems to me that companies are using this as a time to recoup everything that they have lost over the past decade. They are looking for handouts, “U.S Giving away free money”, seems to be the viewpoint of many industries right now. With companies using threats to create wide spread panic for jobs, the government will be forced to take some kind of action. (The Wall Street Journal: Wednesday, February 18, 2009 “GM Seeks $16.6 Billion More in U.S. Aid”)
I'll admit that as I watched President Barack Obama's speech Tuesday night I did have a sense of hope that he truly did understand the importance and urgency of the current economic crisis. My boss's words were ringing in my ears from what he mentioned the day before, "Your second job may be your only job next month." As I listened to him explain how he was going to distribute rebates and not raise taxes for essentially the working and middle-classes, his idea of taxing those that make over $250,000 seemed fine to me. However, good intentions and hope have never made money appear out of thin air. "The 2% Illusion" takes the most recent data available from 2006 on the tax revenue generated from the wealthiest portion of tax payers (the same portion President Obama is now proposing we increase taxes on) and finds that if taxed even at 100% of taxable income (generating $1.3 trillion), that was not enough to cover even half of the governments fiscal budget. The current stimulus plan released today has a price tag of $3.6 trillion. That was conveniently left out of Tuesday night's speech. Simply put, yes the rich have deep pockets, but not that deep. It is going to be very hard for President Obama to sell his concern that he does not want future generations to have to deal with paying for the current debt if he simply does not have a viable way to come up with the money.
"A Short History of the National Debt" By JOHN STEELE GORDON