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Why Americans Should Care More About the $2-$5T Bailout vs. the $789B Stimulus

Posted Feb 11, 2009 04:15pm EST by Aaron Task

"Moving with lightning speed, key lawmakers announced agreement Wednesday on a $789 billion economic stimulus measure designed to create millions of jobs in a nation reeling from recession," the AP reports Wednesday afternoon. "President Barack Obama could sign the bill within days."

The agreement comes after a multi-week debate (so much for "lightning speed") in Washington D.C. over the size and pork-laden composition of the plan, and amid ongoing criticism that it won't do much to stimulate the economy and shortchanges critical issues such as infrastructure and alternative energy.

Americans are understandably angered and frustrated over the stimulus bill. But ask yourself this: Why is it the stimulus package is getting so much more attention than the bank bailout plans, both from Congress and the mainstream media?

One possible answer is the stimulus bill is easier to comprehend and there's a relatively straightforward outlet for our anger: Congress, particularly the Democratic leadership for failing to craft a bill that more than three Republicans could support in both Houses (combined).

The issues behind the bank bailout are certainly more complex and there's more-than plenty of blame to go around - from Wall Street fat cats to Congress (both parties) and regulators (of all stripes), as well as the rating agencies and investors, plus individuals who took on way too much debt.

But given the cost of the bank bailout is orders of magnitude more than the stimulus package, and getting the bailout right far more important to our long-term economic health, let's hope Congress (and the media) will now turn its full attention to finding a legitimate solution to the financial crisis.

But I wouldn't hold your breath.

170 Comments

- Wednesday February 11, 2009 04:21PM EST

Facism is about 5 years away Stock up your canned beans before they ship you all off to the FedGhettoes Google REX 84 Camps and prepare to crap yourself! I've got my mountain drop-house - are you ready?

Grace
Grace - Wednesday February 11, 2009 04:24PM EST

The US taxpayer does not want either the Stimulus or TARP. They are both wrong to fix the problem. Let the markets correct themselves. If the gov't wants to help the people, give us a tax holiday for 6-9 months. That extra money can either pay bills, deposit in banks, or buy stuff. Most of us know how to use our money better than any Congressmen.

Grace
Grace - Wednesday February 11, 2009 04:24PM EST

The US taxpayer does not want either the Stimulus or TARP. They are both wrong to fix the problem. Let the markets correct themselves. If the gov't wants to help the people, give us a tax holiday for 6-9 months. That extra money can either pay bills, deposit in banks, or buy stuff. Most of us know how to use our money better than any Congressmen.

Yahoo! Finance User
Yahoo! Finance User - Wednesday February 11, 2009 04:27PM EST

A trillion here, a trillion there... pretty soon you're talking real money.

Thomas
Thomas - Wednesday February 11, 2009 04:27PM EST

It' frustrating to see our Gov't throw good money,( that we don't have by the way) at a problem. Take the pork out of all the bills on Capitol Hill. If a Bill is unable to withstand the pressure alone, is it reall worth it? Also we put a man on the moon almost 40 years ago, yet we are still are not able to become an engery efficient nation. We need to stimulate the economy and not shor tchange critical issues such as infrastructure and alternative energy.

Unclefulbert
Unclefulbert - Wednesday February 11, 2009 04:28PM EST

Yep, outrage should be on TARP and it's failure. the recovery bill is smaller and at the least, will benefit main street.

Jesse
Jesse - Wednesday February 11, 2009 04:28PM EST

OMG! There's two uhdem packages?!? !?! NO!!!

Joe
Joe - Wednesday February 11, 2009 04:32PM EST

The financial crises will end once it has run its course and gathering every Congressman around the burning city to throw a token bucket of water on the gasoline fed flame will do nothing. Once the fuel of idiotic, worthless debt is gone, the crisis will resolve itself. Unless some idiot finds a way to throw more gas on the fire. Not that any rational Fed chairman would do that would they...?

Melia Sese
Melia Sese - Wednesday February 11, 2009 04:33PM EST

"stimulus?" HA! Aaron didja tell them about the moves toward nationalised medicine ala Canada and Britain? This is what "your" government is planning to do to you now. The method for "covering" everyone - rationing access to doctors. And what if you can't wait? They let you die or live in pain. What compassionate people these Demos are.

Yahoo! Finance User
Yahoo! Finance User - Wednesday February 11, 2009 04:33PM EST

"Don't value money for its own sake, but for what you can do with it." There is something very powerful in being able to flash forward down the road a way, in order to give yourself some instant perspective....

BrianS
BrianS - Wednesday February 11, 2009 04:33PM EST

yeah that's what we need - politicians involved

- Wednesday February 11, 2009 04:34PM EST

Orders of magnitude? How many? One (that'd make the bank bailout 10 times the stimulus bill), or two (that'd make the bank bailout bill one hundred times the size of the stimulus). This error is akin to people saying that something is "literally" just like something else. they really mean "figuratively." But who cares. Now the issue: How many of your readers know that our nation had zero inflation from shortly after the Constitutional Convention of 1787 until 1930? From that time, inflation has been 4,500%. When the dollar was unlinked from the discipline of gold that year, its price was $20. That same 20 dollar gold piece is now $900. Thomas Jefferson wrote in 1798 that he regretted that the federal government should never have been allowed to borrow money. It never would have been allowed to use deficit financing as we do today. The stimulus bill with bank bailouts will drive up our National Debt trillions higher than it is today. Note that when my father was born, that debt was $2 billion,. In Ronald Reagan's first term, that debt crossed $1 trillion for the first time. Today it is $10.7 trillion. Write this down: in another 25 years, it will breach $100 trillion. Today's dollar buys what 2 1/2 cents did in 1933. We are like a frog in a pot: the frog doesn't know that he is being boiled to death. Brush up on your math....

__A_YAHOO_USER__
__A_YAHOO_USER__ - Wednesday February 11, 2009 04:35PM EST

What? Our banking and financial system was, and is, under attack. Financial terrorists crashed planes into buildings as a way to wreck our economy. And they infiltrated our economic entities and threw around monkey wrenches. Specificly, look at the credit rating agencies. The infiltrators gave AAA ratings to garbage bonds. And look at the foreign investment entities that came in, shorted the crap out of stocks, then left the country and never covered the short positions. Look at the foreign investment entities that showed an insatiable appetite for mortgage-backed securities, then suddenly refused to buy any more, leaving the banks holding them. Look at the mid-eastern countries turned to rubble by collapsed banking systems. Let the banks fail and you will think you are living in Pakistan. Yes, the banks got caught in the middle of the terrorists attacks. They are the front line. We have to build them up. Or would you rather buy your freedom and security with the blood of teeagers in the military?

Jesse
Jesse - Wednesday February 11, 2009 04:38PM EST

How did I get smoke screened like that! I thought it was the same thing! Did anyone else think they chose stimulus vs. bailout? Jeez. The debate transmuted into tax cuts vs. spending rather than money for wall st. or money for main st. The media isn't talking about the bailout because we can't comprehend it, but because the 'stimulus' is a smoke screen for the bailout.

asdf
asdf - Wednesday February 11, 2009 04:39PM EST

I foresee when the national debt is so large that it takes the whole GNP to service it.

frankmargel.com
frankmargel.com - Wednesday February 11, 2009 04:40PM EST

Wednesday Night, The market is pricing in the long term stability of assets on the books. The market cannot price in Obama and his dynamic trio of 3 Republicans and every fun loving high spending liberal on the block. Don't blame liberals and the conservatives, blame Americans who vote for them.The banks can't write down bad assets so the market will continue to beat short term market movers and middlecrats until Uncle Sam gets out of the market. Protests should be held at the hill, not on wall street. The market movers will clean up this mess once Uncle Sam leaves the trading to the real professionals. There are are trillions of dollars sitting on the sidelines waiting to move once the gumby squad leaves the books to the ax that must swing. Sell all this junk on the books to willing buyers at any price. Trillions will magically appear from private investors and Uncle Sam can once again provide essential services to those who can't find a job. The market will see the largest one day rally in history. This will happen when voters kick Uncle Sam off the books. God Bless America, and God bless investors who are waiting patiently to use the real power of market wise wisdom. Go long or short but invest in America. Good luck !!!

Eric
Eric - Wednesday February 11, 2009 04:43PM EST

The stimulus makes sense (well, mostly, more business tax cuts is the last thing we need) whereas the bailout has been a big waste. Just bite the bullet and nationalize the banks outright, clean them up, replace managements, and reprivatize. And more people thinking proposed projects through instead of just assuming they're dumb ideas would help. Most of what's derided as pork would put paychecks in the hands of otherwise unemployed people. That's the only thing that can dig us out of this. More people have to get paychecks, or the bank bailout won't matter.getting paychecks, or the bank bailout won't matter.

Yahoo! Finance User
Yahoo! Finance User - Wednesday February 11, 2009 04:43PM EST

This will result in your being witnesses to them....(Luke)

Cydevil
Cydevil - Wednesday February 11, 2009 04:44PM EST

Are we broke yet? Lets get this depression under way, the faster it happens the faster we'll recover, if we can that is.....

Cydevil
Cydevil - Wednesday February 11, 2009 04:44PM EST

Are we broke yet? Lets get this depression under way, the faster it happens the faster we'll recover, if we can that is.....

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