With its coming bailout of homeowners and mortgage lenders, the federal government refortifies its role as daddy for the American people and the people’s role as child-adults who are dependent on their daddy to take care of them.
The bailout, while strengthening the federal government, makes the American people weaker than ever. A people who look to the government for their sustenance and to protect them from their own mistakes and from the adverse vicissitudes of life will inevitably be a weak people.
The economic question is: How long can these paternalistic programs continue? Is the final day of reckoning just being delayed? After all, don’t forget that these programs of unfunded liabilities stretch all the way back to the New Deal in the 1930s. Every few years, a new crisis materializes, only to be jerry-rigged by the feds. Most everyone assumes that the process can go on forever.
The government gets its money in one of three ways — taxation, borrowing, or printing it (i.e., inflation). Regardless of which method is used, it all comes from the pockets of the American people.
It’s fairly easy for public officials to issue these types of bailout plans. They just have to pass a law that doles out the goodies. But consider all the potential liabilities the federal government has incurred as part of being the people’s daddy. People’s retirement (Social Security). People’s healthcare bills (Medicare and Medicaid). FDIC insurance for people’s bank accounts. The savings and loan bailout. The home mortgage bailout. And countless more.
Most everyone assumes that while there might be a crisis here or there, the federal government will easily be able to deal with it. But what happens if there is a perfect storm of several industry-wide collapses? For example, instead of a few banks failing what happens if there are bank runs on 90 percent of the banks? How is the government going to cover everyone’s losses? By taxing everyone? So, let’s see: Someone loses $50,000 because his bank (and everyone else’s) fails. To get the money to pay him off (and everyone else), the government taxes him $50,000. How does he come out ahead with that kind of “insurance”?
But hope springs eternal and faith in the power of Caesar never fails. People honestly believe that despite the fact that the federal government has had a system in place ever since the New Deal that sustains and protects weakness, it will go on forever. All that’s needed is a new paternalistic program every few years.
Oh, don’t forget that the national debt, which continues to grow each day, is now at 9.5 trillion or about $31,000 per person. Five years ago, it was at about $26,000 per person. What if the day came when that debt had to be paid off? Could your family handle the tax to pay off its share of the debt? What if it came on the day that banks were failing on an industry-wide basis? What if it came when the Baby Boomers were all retiring and demanding their Social Security payments?
But why think about such unpleasantries? Heck, maybe if we’re lucky we’ll all be dead when the day of reckoning finally arrives, leaving our children’s generation to deal with the problems.
No one can say though that federal officials are dumb. People who are bailed out are likely to be very grateful to their federal daddy for having helped them out. How likely is it that bailout recipients will ever challenge the government at a core level? Who’s going to bite the hand that feeds him? Oh sure, people will carp about governmental inefficiency or call for reform of this or that government program, but when it comes to questioning such things as torture, wars of aggression, occupations, warrantless searches, and socialist bailouts, the lips of weak and dependent child-adults are likely to be silent or kissing the boots of their federal providers. That’s why Roman officials used “bread and circuses” as they extended the reach of their Empire around the world.
Our American ancestors understood that the more powerful the government is, the weaker the people will be. Thus, it shouldn’t surprise anyone that for more than a century Americans lived without such socialist programs as Social Security, Medicare, Medicaid, income taxation, welfare, mortgage bailouts, and the like. Americans also believed it was morally wrong to use government to take money from one person in order to give it to another person.
As federal officials prepare to enlarge their socialist feeding trough once again, alas, the principles of economic liberty and limited government are lost on the weak and dependent child-adult Americans of today who are preparing to do the feeding.