At least one estimate places the potential costs of these bail outs/economic stimulus plans as high as 7 trillion dollars. That amount is 10 times the cost of the war in Iraq. It is more than the cost of the Vietnam, and Korean wars, the New Deal, the moon landing and the Louisiana purchase combined.
This situation reminds me of one of my favorite quotes from President Reagan. He said, "Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it."
Many will agree that the federal government has acted irresponsibly and all of the massive indebtedness spending is taking us down a road that we should not be traveling. However, often lost in this debate is the irresponsibility of state government leaders who have contributed to the economic problems in their own irresponsible fashion.
For instance, prior to receiving a private sector loan, the state of California appeared ready to ask for their own bail out. California is facing a budget deficit that may hit $41.8 billion over the next 18 months, potentially forcing the state to issue IOUs for everything from its electricity bills to food providers.
I don't know about you, but the last thing I want is for the federal government to tax me and then use my tax dollars to bail out irresponsible politicians in another state. California should focus on cutting spending in their own state without becoming a burden on the national debt we all share.
In all the debate about whether or not some of the Michigan-based auto industry should be bailed out, there is rarely a reference to the horrible economic conditions and punitive tax policies recently imposed by Michigan politicians. Just last year, Michigan politicians took the unfortunate step of increasing income tax by $760 million and instituted a very damaging business-to-business excise tax projected to cost another $750 million. The state's unemployment rate rose from 6.9 percent in 2006 to 7.2 percent in 2007; the highest in the nation and the highest average annual rate.
I believe that those who serve at the state level have the responsibility of creating a business-friendly economic climate and should never incur unnecessary long-term debt. To create punitive conditions that play a part in forcing businesses to see the need for government incentives is very unwise. And it is wrong for state governments to incur unnecessary long-term spending (bonded indebtedness) which makes it harder for them to reduce spending in tough economic times.