How to spend $700 billion

On September 29, the U.S. Congress voted 228-205 against a bill intended to provide $700 billion to rescue the nation’s critically failing financial market. At this writing–two days later–the thwarted bailout has gotten a second wind as the Senate voted to accept the proposal, after making it more palatable by adding a number of provisions and tax incentives. The “Troubled Asset Relief Program,” (more commonly known to us as “the bailout”) will almost certainly have gone back to Congress for a vote by the time you are reading this.

On September 29, the U.S. Congress voted 228-205 against a bill intended to provide $700 billion to rescue the nation’s critically failing financial market. At this writing–two days later–the thwarted bailout has gotten a second wind as the Senate voted to accept the proposal, after making it more palatable by adding a number of provisions and tax incentives.

The “Troubled Asset Relief Program,” (more commonly known to us as “the bailout”) will almost certainly have gone back to Congress for a vote by the time you are reading this.

While nearly everyone is able to agree that something needs to happen, and happen soon–the difficulty in pushing this measure through might be based on the fact that no one is eager to spend an obscenely large amount of money on financial institutions that have already failed.

Admittedly, I’m no financial wizard–a brief glance at my bank statements would make this fact evident to anyone with even the most rudimentary grasp of numbers. My lack of economic savvy doesn’t, however, make it at all difficult for me to see some major problems with the idea of adding $700 billion to the national debt. It’s a bad idea to fund a plan that basically involves buying bad debts from failing companies, which are still in the business of helping people get further into debt.

On an individual level, the bailout is the equivalent of me getting five credit cards, all with terrible interest rates, only to max them out without being able to make the payments. Then, in a stroke of fiscal genius, I open yet another credit card account to transfer all my balances–so that I can run all the cards up to their limit again. Further, when I have no credit left, and I can’t make my payments, some unfortunate person who doesn’t even know me has to pay off my debt.

Before you decide that I have no interest in this country’s financial well being, please understand: I’m all for investing $700 billion to save the economy. I just want it to be money well spent. We all should be gravely concerned about the potential failure of the economy–even those of us without investment portfolios, 401Ks or retirement savings (and only the vaguest of notions about how or why we should get any of these things).

For example, the state of the current financial climate means that fewer and fewer lenders are willing to offer student loans. More people are enrolling in college every year; the amount of federally funded student aid will not increase at the same rate, if it increases at all. You can see where I’m headed with this, can’t you?

With unemployment on the rise, more and more people see a college education as the best way–maybe the only way–to eventually find a good job. And it’s indisputable that the more knowledgeable the workforce, the more financially and technologically competitive the country will be. This seems so simple: to buy a better future, education seems like a solid value.

Assuming that a four-year-college degree can be had for $80,000, then $700 billion would pay for the college and living expenses of about 8,750,000 people. Think of the buying power of that many people with no student loan debt to pay off! This alone might provide the economic stimulus to turn our nation’s financial problems around.

I must admit, this is a personally motivated solution–after all, I’m a student. I worry about how to pay for school and I worry about how to pay off student loans later. Even though funding education is crucial, solving the immediate crisis requires more immediate solutions. What else could $700 billion buy that would help the economy right now?

Earlier this year, U.S. taxpayers received stimulus checks that were intended to help shore up our feeble economy. The bailout money could be distributed equally between every man, woman and child in the United States, giving us each about $2,300 to spend. Unfortunately, even though I’m sure we all would patriotically go and spend our stimulus checks the minute they arrived, I’m pretty sure that this isn’t the solution to an economic crisis. It does bring to mind another, more relevant way to spend money that doesn’t actually exist: credit.

Credit and debt are the cornerstones of this country’s market–so why not apply the “Troubled Asset Relief” funds toward people’s credit balances? If someone is getting bailed out, shouldn’t it be the people that will continue to consume at any cost? $700 billion would wipe the slate of almost three-fourths of the nation’s current personal credit card debt. That’s $700 billion that people would be able rush out and spend all over again. Economic crisis averted!

I have to admit that this plan is unfair to the people who haven’t racked up major debt, though. There must be a way to make “Operation Bailout America” an even-handed success, and something we can all agree on.

What do we need to jump-start spending? First off, a plan is in order. For $700 billion, we could hire celebrity wealthy-man Donald Trump to give 3,500,000 speeches to the American public about how to create and keep wealth.

We need jobs. Seven hundred billion would pay the $40,000-a-year salaries of 3,500,000 people for five years. It would pay for childcare so that nearly 60 million single parents might be able to enter the workforce full time. The money could go to re-open some of the country’s deserted manufacturing plants, utilizing them to build wind generators instead of gas-guzzlers. Renewable clean energy and creating new jobs–what’s not to love?

We need homes. With $700 billion, 35 million low-to-middle income families would be able to make down payments on homes–and that money would go to the banks that desperately need bailing out, give a shot in the arm to the housing market and help people who need it most.

The ideas and plans I just mentioned are not new to the discussion of how to solve America’s problems (with the exception of hiring Donald Trump to provide an unending stream of financial inspiration, which honestly isn’t a very good plan). But every one of them has a better shot at helping our sick economy heal while helping some segment of the American public at the same time–instead of just mortgaging our future to bail out businesses that have already failed.