The President-elect is naming his economic advisors -- a very smart group. And he has demonstrated determination to face the problems squarely and comprehensively. But are we expecting too much in the way of a bailout or stimulus plan?
What worries me most is that many people seem to expect miracles, instant miracles. I was on a local call-in show Monday evening, and found that people in this particular audience were expecting a check to arrive in the mail. That was their vision of the upcoming economic plan.
One caller complained that a few hundred dollars a person wasn't going to make much difference. Instead, he proposed that a check for $50,000 be sent to each American for the "bailout." He was serious! Asked where the money would come from, he responded quickly: "From the paychecks of all those rich CEOs that have been ripping us off!"
I guess that balanced off the outrage of last week - the utter stupidity of the top auto execs private-jetting their way into Washington to ask Congress for money, without even presenting a plan. Were their expectations any more ridiculous than the sentiments of the guy on that phone call?
Can this get any more ridiculous, any more extreme? And, by the way, where are we going to get all this money for the "bailout" that everyone is expecting?
Terry Savage writes a syndicated personal finance column for the 
Hi Terry,
In keeping with the prevalent spirit here....I want my 50000 and I want it NOW!!!
Have a nice day.
Robert
I too have been concerned that lots of folks who do not "think" about
things, and therefore have unrealistic expectations about what will
happen and how quickly. And of course those dunderhead CEO's from
Detroit don't help things by using that plane - they just feed people
like that man.
The fact that someone is so unrealistic and ignorant about "how things
work" does not bode well for President -elect Obama and a second term.
Mr. Obama seems to be a reasonable person who is confident and smart
enough to know his limitations - a pragmatic leader (which from my
perspective is wonderful). He does need to use his "bully pulpit" to
begin to set the reasonable expectations for folks like that man -
because that type of person is way too "lazy" to do much introspective
thinking or research to educate themselves. He is a student of history
and should check out Reagan's approach to setting expectations, etc.
Anyhow thanks for your great information.
Ms. Savage,
The best, quickest acting stimulus package including a tax cut for the Middle Class would be simply to exempt the first $10,000 of earned income from the FICA & Medicare tax and add the $10,000 to the top end.
In other words FICA etc. instead of taxing wages from $0 to $100,000(?), it would apply to wages from$10,000 to $110,000. Both from the employer AND the employee.
This would provide IMMEDIATE tax relief and a permanent shot to the economy.
It CAN be done by replacing the Trust fund loss by General fund revenue.
Benefits---a great incentive to hire new people.(need to find a way to prevent employers from hiring someone only until they get to $10,000 then firing them to hire new (exempt employees, ) etc.), a great way to allow people to spend their own money as they choose. etc.,etc.,etc. if they want to buy health insurance with it—OK, if they want to use it to save for college or trade school—OK, if they want to buy a car with it OK. It also has the benefit of increasing taxes on the more well to do.
I know, I know the Devil is in the details but They can be worked out.
Please DON’T tell me any of the hundred reasons it won’t or can’t work.
We can find a way to make it happen.
By the way, this was floated many years ago by Robert Reich during the Clinton years and promptly drowned. As a card carrying Republican I am reluctant to give Democrats credit for anything BUT a good idea IS a good idea.
SAVAGE SAYS:
OK, I will give you just ONE reason it won't work. I want to collect MY social security -- and they've spent that "trust fund"!!! Cutting taxes is always a good idea, but mathematically you won't make up the money lost from cutting at the bottom with that cut at the top! Terry
I understand the feelings about the use of private planes. But how do our Federal Reps. get around, Reid, Palosi, Durbin, Obama, I don't hear of them on Southwest. And what about all those Big SUV's I see them in on tv? Why aren't they in little Priuses.
But I have a question. If US car manufacturer are froced by the Government to build hybred cars, what about the foreign car companies? Will they still be allowed to build gasoline cars for sale in the US? And how do you see that helping our car problem?
SAVAGE SAYS: The very GOOD thiing about the free enterprise system, is that is IS free! The government can't "force" the auto companies to do anything! They can create incentives -- such as demanding they use new money given to them by the taxpayers in a responsible way.
It will take many years for a non-gasoline engine to become a practical reality, and by that I mean priced so that consumers can afford it. What good does it do to avoid buying gasoline if the car costs $100,000!! In the meantime, we'll need more gasoline-powered cars, or possibly hybrids.
But you're right about one thing -- if they haven't learned a lesson, we'll have to draw the line somewhere on this bailout. If foreign car companies can make better cars, the free market says we'll buy them!
Instead of giving a bailout to the big guys, banks, or automakers, why not give to all U.S. CITIZENS, 21 YEARS OF AGE, $10,000 CASH. I AM SURE EVERYBODY WILL BE HAPPY AND THUS PAY THEIR CREDIT CARDS, BUY a CAR, TRAVEL, PAY TUITION,HOUSING RENT, FOOD & MEALS,AND MEDICAL BILLS FOR HUMAN BEINGS AND PETS, CLOTHING, ETC... THIS COSTS $50 BILLION. IN THE 1930'S THE YEAR OF THE DEPRESSION, U.S. GOVERMENT GAVE LOTS OF MONEY AND FREE HOUSING TO EVERBODY. I AM SENDING THIS EMAIL WITH THIS PROPOSAL TO ALL LAWMAKERS AND I NEED YOUR HELP TO DO THIS IN ORDER FOR THE LAWMAKERS TO GET THIS MESSAGE..
Big bank are always asking money and the government always rescue them since 2007 but no help given to homeowners. They keep the money themselves. Top executive receiving $1 million per month salary. Wow. plus bonuses.
SAVAGE SAYS: Interesting idea! comments anyone?
Yes... where WILL the money come from? If they raise taxes significantly, only on the rich, they might actually collect LESS money, as the "rich" are smart, and always find a way to avoid taxes when they are high. They can't go and raise taxes on everyone else, as that would virtually be political death. So... they'll either borrow it (issue LOTS of government bonds), mortgaging our future, or print it, which would cause MASS inflation. Neither option is good. Things are going to suck for while. The "messiah" has no answers... what a surprise.
SAVAGE SAYS: Exactly! Gold, anyone?
Good Morning,
I read your column in the Suntimes this morning and I do realize that there is problems with the economy, but I have a question.
If the economy is all that bad, why do I see truck after truck on 294 going both north and south. Somebody is moving commerce and with the number of trucks every morning and evening something must be working.
Do you know what it is?
SAVAGE SAYS:
SAVAGE SAYS: Why are YOU on the road? Going to work? The world didn't end, in spite of the headlines! At least 90% of the population is still employed, still shopping for food and necessities (though less other stuff) and the economy continues to function, though just not at the rate it did when everyone was charging everything!
You sound impressed with our incoming president. He does sound very serious and determined. His candor was impressive. He did not promise miracles, just hard work and a sense of urgency. I think that if he remains candid with the country, yet still optimistic, it should help a lot. It must have been an impressive event to have attended.
SAVAGE SAYS: It was impressive -- and humbling -- to think of this huge task and America's high expectations that something can be done quickly.
Terry, it became clear to me several years ago as our manufacturing base started moving overseas that the owners of the businesses were cutting there own throats as the very people that support a growing economy are the people that work in the manufacturing arena and supporting industries.you need to be a producer of products to bring new money into the economy.The only long term solution to our financial crises is to bring back all the jobs that were lost overseas. The only way we can compete with ultra cheap slave labor is for us to bring our standard of living down to their level. I don’t think we want to go there.The only way is to implement a trade
Tarrif that will take the incentive out of using foreign labor and creat a more bALanced trade program.recovery would not happen right away butit took years to lose these jobs and it will take years to recover. We should stop wasting money on these banks and help out the manufacturing sector ie the big three etc, but not without a tarrif plan thanks tony
SAVAGE SAYS: Google: "Smoot-Hawley Tariff" -- That's what really led to the Great Depression. History helps -- if you read it! Terry