Ump on a Blog

The following are the types of people who will benefit from the mortgage bailout proposed (and soon to be passed) by President Obama and the Democratically-controlled Congress:

The man who buys a modest house with a large down-payment and a 30-year fixed rate mortgage with responsible terms, who then loses his job at, oh, say Merrill Lynch or AIG.

The woman who buys a modest house with a large down-payment and a 30-year fixed rate mortgage with responsible terms, whose husband then runs off with his secretary to some Caribbean island where he can’t be tracked down for child support, sticking the woman with the kids, the house, and a job that can’t pay for either.

The couple who buys a modest house with a large down-payment and a 30-year fixed rate mortgage with responsible terms, who then are forced to take a job transfer to a distant city, renting in the mean time while their house sits on the market for over a year due to the soft real estate conditions in the neighborhood.

The man who buys a modest house with a large down-payment and a 30-year fixed rate with responsible terms, but is then injured on the job and is unable to work, receiving a disability check instead of the paycheck that was previously able to pay the bills.

The woman who buys a modest house with a large down-payment and a 30-year fixed rate mortgage with responsible terms, whose child is diagnosed with a life-threatening disease and requires round-the-clock bed-side care — forcing her to quit her job.

The man who buys a modest house with a large down-payment and a 30-year fixed rate mortgage with responsible terms, but is then sued by his neighbor — the ambulance-chasing lawyer — over the run-off from his gutter spilling over onto the neighbor’s prized hydrangeas, an obvious nuisance lawsuit that nonetheless soaks him for tens of thousands of dollars in legal fees before the case is thrown out.

Are any of these people irresponsible? Without question, no they are not. Are any of these people stupid, misinformed, victimized or gullible? Without question, no they are not. Are any of these people in any way responsible for the fate that has befallen them? Without question, no they are not. Do they deserve to benefit from the mortgage bailout? Without question, yes they do.

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The following are examples of people who will pay taxes to contribute to the cost of the mortgage bailout proposed (and soon to be passed) by President Obama and the Democratically-controlled Congress:

The major oil companies, who raked in over $100 billion in profits over the last eight years, due in no small part to a war started with the expressed purpose of driving the price of oil through the roof — thus creating the staggering profits.

The Wall Street investment houses, whose unbridled greed and complete disregard for even the most reasonable financial regulations were the primary contributing factor to the financial sector collapse.

Take-the-money-and-run mortgage brokers, feeding a ravenous Wall Street appetite for bogus securities by lying to prospective home-owners to suck them into terms permissible only through GOP-mandated deregulation gone berserk.

Major corporations who have, for the last 30 years, been steadily and increasingly shipping jobs overseas in an effort to boost profits, causing a steady stream of unemployment through the manufacturing, textile, and technology sectors.

Board members, C-level executives and top managers from these companies, who have been lining their pockets with the bulk of the windfall resulting from this corporate pillaging.

Stockholders of these companies, who have encouraged this type of behavior by demanding a constant stream of profits and dividends (instead of sound and responsible business practices), while overlooking the preposterous excesses of the companies’ management and ignoring the effects on the overall economy.

Are these people and organizations at fault for the position we find ourselves in right now? Without question, yes they are. Do they deserve to pay the bulk of the tab for righting the wrongs they have done to the economy? Without question, yes they do. Moreover, should they be held accountable in criminal court for their actions, or lack of actions, as it pertains to this financial collapse? Without question, yes they should.

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Are all of the people who will benefit from the mortgage bailout responsible, law-abiding citizens? No. Are all of the people who will pay for the mortgage bailout money-grubbing hypercapitalist mercenaries? No. In a perfect world we would be able to see all of the wrongs that have been done and punish those responsible for them. This is not a perfect world, so all we can do is try to fix the damage and prevent such wrongs — ALL of the wrongs — from happening again.

As a final word, consider this. Most of those I have heard bitching and moaning about responsible people having to fit the bill for the irresponsible ones who couldn’t pay their mortgage are supporters of the Republican party. Folks, guess what: the rest of us have had to endure eight excessively long years of an unadulterated imbecile spending our tax dollars to spill American blood in two pointless wars, doing everything possible to circumvent and in some instances unabashedly abolish our Constitutional rights, and handing over money that could be going to our kids’ education to fat cat oil executives.

You lost. It’s payback time. We didn’t want our tax dollars going to anything President Bush did either, but we didn’t get a say in the matter — now, neither do you. It will probably take another seven years and ten months until we’ve fixed the damage done by the previous eight years of that Southern-fried idiot. But fix it we will, without question.

As the debate over President Obama’s stimulus package continues to plod through the U.S. Senate, trouble has arisen. And no, it is not in the form of the Republican alternative stimulus proposal, which included (*Gasp!*) big tax cuts for the rich and large corporations. Thankfully that was ignored, as well it should have been. One wonders if anyone in the GOP has come up with an original idea in the last 30 years.

No, the trouble lies in the “compromise” reached in the existing stimulus proposal, which slashes $19.5 billion targeted towards education construction everywhere from elementary schools up to four-year universities, and the $76 billion in remaining education spending will be in jeopardy when the conference committee meets to iron out the final wording of the legislation.

This is one of the centerpieces of the stimulus package, and it has already been gutted by myopic conservatives whose main concern is their personal pocketbooks. But they don’t realize that they are foolish to try to kill these provisions. They will create jobs now, they will create jobs later, and they will pay for themselves in additional tax revenue without raising the marginal tax rates one nickel.

Building more schools and expanding or repairing existing ones means construction jobs all over the country. The end result is cleaner, safer schools with more space for enrichment activities like library time and phys ed, as well as smaller class size and more individual attention for students. More funding for the schools themselves means busier schools: more teachers, more purchases of equipment and supplies, and more funding for activities after school, all of which tend to increase attendance and lower truancy and dropout rates.

At the university level, more funding for college students means higher enrollment, which means more classes to accommodate more students, and those classes need teachers who will need to be hired. So overall we’re looking at teaching jobs, construction jobs, higher spending on supplies and equipment: jobs, jobs, jobs, and more jobs. All right now, all focused on the local economy.

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America is losing the race to new technologies. The only commercially viable hybrid cars on the road today were designed and built in Japan. In more than one of the last ten years, the only NME (new molecular entity) drugs brought to market with notable effectiveness over the drugs they were competing against were developed in Europe. The United States used to be the epicenter of technology and innovation, but we are now far behind countries in Asia and the EU, and with each passing day that gap widens. How do we catch up? Education.

So who should take responsibility for paying for the kind of advanced education that we are talking about? Republicans will say that the market should be left to address the issue. We need to first take note of the fact that there has never been anything stopping the market from addressing this problem, and still we continue to fall behind, so it’s plain to see that the market-based strategy is not working. And the reason it is not working is, as I will demonstrate, the market has no incentive to address this problem, and therefore, never will.

What could companies do to increase education? Pay for it, in whole or in part. But then what? The employees receiving this schooling are not bound to stay with the company for any duration, and so the training the company pays for might walk out the door for a different job the day after class ends. So how does the company protect that investment? They build a condition into the education payment forcing the employee to pay back the company in full if they leave their job within a certain time frame after receiving the training.

Now: given those conditions, how many employees are going to enroll for classes? Exactly zero. Who would turn themselves into an indentured servant for however many months or years, watching the company lower their salary by almost the exact amount they paid for the training? Nobody! So the end result is, nobody takes advantage of the training.

I see your skepticism about the scenario outlined above. Put that thought out of your head: I have witnessed that *precise* scenario unfold at a previous job. I was the employee. It’s real, and it’s happening all over.

So as you can see, there is no market incentive for companies to invest in employee training, and that is evidenced by the dwindling number of companies that even offer that type of benefit, and the shrinking percentages of the company contribution for the ones that still do. The market will never help to solve this problem, and continuing to do nothing will merely hasten America’s decline to the second tier of world economic powers.

For that reason, it is imperative that government intervene. It is the only way that the problem will get resolved.

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Who benefits from a more educated work force? E-V-E-R-Y-B-O-D-Y. The people receiving the education and training will see their earnings go up, meaning lower consumer debt and more discretionary income for investing and consumer spending. A certain number of them will buy new cars, giving a boost to the beleaguered auto industry, and some will move into a new house, driving up long-stagnant real estate prices and kick-starting new home construction and durable goods manufacturing.

Businesses will have a wealth of new talent to choose from, and higher supply with fixed demand means companies can hire better workers for less money. The frequency of promoting from within will increase, lowering search costs and shortening the new-hire learning curve. All of this means a BIG win for both large and small businesses. And we didn’t even mention the fact that a more educated employee is more likely to suggest a new product or business strategy that will increase revenue, lower costs, open up new markets and/or extract additional profits.

More workers earning more money; a boost to consumer spending; higher profits for businesses; all of this adds up to higher tax revenue, and you wouldn’t even have to increase the marginal tax rates to see that additional tax revenue come in.

Everybody wins with more education, and therefore it is everybody’s responsibility — everybody’s obligation — to contribute to funding the plan. Everybody contributes, everybody reaps the rewards. Nobody gets to cheat on their share of the contribution. The only way that can happen is by the government collecting taxes in accordance with existing tax laws, and distributing the money to the appropriate areas. That’s the way this country is supposed to work: justice, fairness, equality.

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Republicans make a big stink about America being a meritocracy: those who can achieve the most rise to the top, and deserve the rewards. But what they really mean is, anyone who can buy their way to the top deserves the rewards too. It’s a money-tocracy to them, and since they have money, the don’t care about anyone who doesn’t.

And in the case of higher education, every useless waste-oid who gets into Harvard because their father donated seven figures to the Law School takes the place of a deserving student who could have been accepted on pure talent and hard work. Where’s the “merit” in a borderline C- student with wealthy parents getting into Stanford or Cal-Berkeley, while the class Valedictorian from East LA gets accepted but can’t get the funding? And how do we, as a nation, benefit by allowing that kind of thing to continue?

No, it’s time to make the GOP walk the walk, and not only restore the construction spending and fully fund the existing measure, but expand it to include loan guarantees for any student who can demonstrate no ability to get funding, regardless of income.

To see our way through this financial tumult we need to invest for tomorrow. That means funding for new infrastructure projects, incentives for research and development, and huge investments in education to ensure we regain our standing as the world’s leading economic power.

Republican opposition to President Obama’s stimulus plan is a desperate grab for what George Bush has been handing them for the last eight years: all of the rewards, none of the costs. Well, guess what: the party’s over. It’s time to stuff if down the GOP’s throat and make them pay their fair share. They’ve had it too good for too long, and they are long overdue for a reality check. We need some common sense governance to get us back on track. That means restoring and boosting the education and construction spending in the stimulus package, and getting it on President Obama’s desk as soon as possible.

EDITOR’S NOTE, 2/12/2009: The conference committee results have preserved all of the education spending in the original plan, removed business tax cuts and restored a substantial portion of the education construction spending. Somebody we elected to Congress does, indeed, have a brain. Whomever that is, thank you. Thank you very much. -N. Reeding