Treasury Continues to Fumble -- Will They Ever Get it Right?
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The silence of the fiscal conservatives on the vast sums going to the banks is hard to understand. After all, how can someone get so upset about the prospect of $200m being spent to re-sod the National Mall in Washington, but be unconcerned when $160 billion -- almost 1,000 times as much money -- goes out the door to AIG?
The sums of money going to bail out the financial industry dwarf the waste and pork that get John McCain and other budget hawks excited. Yet they are strangely calm about the bailout money. In fact, the amount we spent patching the financial system could well be large enough to make the Social Security system fully solvent over its 75-year planning horizon, yet we barely hear a peep from the Peter Peterson Foundation and its merry band of anti-Social Security crusaders.
The only answer we ever get in response is that we have no choice. But just six months ago, Henry Paulson, Ben Bernanke and Timothy Geithner thought we could make a much more extreme choice. They were wrong then, but they are not stupid. We should go back to the bankrupt Lehmans and see if we can do it right this time.
Dean Baker is co-director of the Center for Economic and Policy Research.