It happens every few years. A politician, or a politician disguised as an economist, will pronounce that without passing some critical piece of legislation, the country will be a few days from plunging back into the dark ages. It is one of the oldest tricks in the book. In one the saddest aspects of our economic world, the public—not having the time or will to discover the root causes of these economic problems—actually buys into these ploys.
This anecdote comes from G. Edward Griffin’s The Creature from Jekyll Island:
In 2008 it was Hank Paulson, U.S. Treasury Secretary, who said that $700 billion for TARP, or Troubled Asset Relief Program, which would be needed to avert financial disaster. The original draft of the law allowed Paulson to unilaterally decide which firms needed help and which didn't.
This opened the window for the “bridge loans” and subsequent bailout of General Motors, a company that was in shambles far before the Financial Crisis hit. The rationale was that millions would lose their jobs if GM failed.
This scam has been going on for decades, and this decade will likely be no different. With the new year come new scams, as Austan Goolsbee, chairman of the President’s Council of Economic Advisers, shows that even the oldest trick in the bailout game can be dusted off and trotted out over and over again. On ABC’s This Week he had this to say about raising the debt ceiling, which is the legal limit of the U.S. government’s total borrowing:
The national debt, currently $13.9 trillion ($44,884 per citizen), is quickly approaching the legal limit. The debt ceiling, currently $14.3 trillion, will soon be shattered unless Congress takes action to raise the debt ceiling. As Congress will undoubtedly vote to bail itself out—the unwitting citizens of the U.S. will be pushed further and further in debt.