$800 Billion burning a hole in your pocket? Spending idea
Against the better judgment of hundreds of economists as well as the vast majority of the voting public (those annoying constituents), Congress approved Henry Paulson’s bailout plan. Now Paulson’s appointed “bailout czar”, Neel Kashkari has $800 billion tax dollars burning a hole in his pocket and he is trying to figure out how to spend it. My wife was a loan officer and defacto credit counselor way back in the late 1900s when most banks and credit unions still carefully considered credit ratings, debt/income and debt/asset ratios. She often helped people understand how to prioritize their spending. Sometimes little changes such as forgoing the daily cappuccino were enough to lift people out of debt and improve their credit rating. Our bailout czar’s job is slightly different. In order to efficiently bail out failing financial institutions, he must invest taxpayer’s money on assets that no one in their right mind would buy with their own hard-earned money. I personally don’t think this is a good plan. At best it is a temporary patch to a deflating asset bubble. If the bailout czar really wishes to use tax money to improve long term American economic growth and competitiveness, he should consider the following options for spending 800 billion dollars:
- Bailout Chrysler 800 times (in 1979 dollars). This cash flow diagram indicates that, not so long ago, Detroit fueled a huge portion of the U.S. economy.
- Repeat the Apollo moon lander program (including R&D from 1961-1969) 32 times (8 times in 2008 dollars).
- Install photovoltaic solar roofs on 32 million homes (1/5th of all homes in the U.S.)
- Pay full (unadjusted) tuition for their first year of Yale for 70% of 18-25 year old Americans. (Quoted tuition is for Yale medical school, but Yale has other specialties which could prepare students to become business leaders, presidents, senators, economists…)
- Fund the National Cancer Institute for 165 years.
- Provide microcredit loans for the world’s $1 billion working poor.
- Fund UNICEF for 266 years.
- Buy every possible ticket combination in the Florida Lotto for 57142 weeks, which means Paulson could hold a winning Florida lottery ticket every week for 1098 years.
- SETI. Wisconsin’s former Senator and spendthrift William Proxmire once awarded his famous “Golden Fleece Award” to project SETI. Paulson’s bailout money could fund project SETI for 160,000 years.
I’m confident that any of the items on my shopping list would give U.S. taxpayers more bang for their buck than the current plan to reinflate the property bubble, an asset bubble which caused a massive misallocation of financial and intellectual resources and actually works against U.S. global competitiveness.
Incidentally, $800 billion is a lot of money, but it isn’t an infinite amount. Unfortunately it isn’t enough for the following:
- $800 billion won’t buy enough Starbucks cappuccino to fill Lake Erie, the smallest great lake. However, if you combine all of the recent Fed and treasury bailouts, you could buy enough instant coffee to flavor the Great Salt Lake. You could also buy enough cheap off-brand root beer or Kool-Aid to fill Lake Okeechobee. Wouldn’t this be a nice modern variation on the Boston tea party?
- $800 billion could easily fulfill Herbert Hoover’s promise of “a chicken in every pot” (in fact everyone’s pot could contain 666 $4 chickens), but to put “a car in every garage” as he also promised, you’d want slightly more money unless we’re willing to settle for a used or economy car in every garage.
- $800 billion would fill a bag with about 80 billion decent ACE hardware hammers but apparently only 1.3 Billion military grade hammers.
- If you sent $800 billion to the International Star Registry, they would only name 22 Billion stars after a loved one in their “official” book. But the Milky Way galaxy contains at least 200 billion stars and there are billions of other galaxies, each containing hundreds of billions of nameless stars. So at best, only about one in every 10 stars in our galaxy could be named “Henry Paulson”.
- By bnitz on Oct 30, 2008