Driving Toward Failure
Sen. Everett Dirksen probably never said the words "a billion here, a billion there, and pretty soon you're talking real money." But in today's Washington, a billion here and a billion there is indeed a mere rounding error on top of a $17 trillion debt.
Consider the soon-to-be-completed bailout of automaker General Motors. The Wall Street Journal reports that the federal government plans to sell its remaining GM stock by the end of the year. At current stock prices, the deal will have cost taxpayers more than $10 billion.
A small price to pay, we're told, to "save" so many jobs -- tens of thousands, the Journal reports. Perhaps. If the government preserved 50,000 jobs, that works out to $200,000 per job. Maybe you think that's worth it, maybe not. But this buyout may not have solved any problems; it may simply have set the table for the next buyout.
"The intervention changed the relationship between government and American business, upended bankruptcy protections for bondholders and gave labor a significant stake in the company," the Journal explains. Still, "it left unanswered questions about what could happen the next time a major U.S. industry nears collapse."
It's also notable that the government is selling its shares at a loss, even though U.S. car sales are healthy once again. It means that in this case, Washington vastly overpaid. The government makes a "crappy" venture capitalist, as former Treasury Secretary and top Obama aide Lawrence Summers once said.
Policymakers, in both the executive and legislative branches, acted in haste to "invest" in GM back in the autumn of 2008. If they had stopped to think, and to look around them, they might not have acted at all.
Stand on any street corner in Northern Virginia and watch the stream of cars with foreign nameplates go by. The D.C. metro area is lousy with Toyotas and Hondas, and it boasts far more than its fair share of BMWs, Volvos, and Mercedes. Only in Washington would policymakers be ready to buy American car companies when they won't buy American cars.
But the auto bailout and its big losses aren't an aberration; they're business as usual. Never in the history of the world has money been spent as quickly, and with as little oversight, as it is spent today in Washington, D.C.
In the weeks after Hurricane Katrina, the federal government was shoveling out almost $1 billion per day. "Among the many superlatives associated with Hurricane Katrina can now be added this one: it produced one of the most extraordinary displays of scams, schemes and stupefying bureaucratic bungles in modern history," The New York Times reported nine months later, "costing taxpayers up to $2 billion."
And who can blame the schemers? Criminals go where the money is. These days, there's not as much money in banks as there used to be, but there's still plenty to be made defrauding Uncle Sam, because the bottom line is that Washington never has to worry about a bottom line.
The federal debt now tops $17 trillion -- more than $50,000 for every person in America. It may be impossible to completely eliminate that debt. But we can, and must, reduce it. As GM was said to be "too big to fail," the federal government has simply become too big to succeed.
Rich Tucker is a senior writer in the B. Kenneth Simon Center for Principles and Politics at the Heritage Foundation.