by Deb Cupples | We ordinary taxpayers are outraged by the Bush Administration's attempt to funnel 700+ billion tax dollars into the pockets of Wall Street executives who helped drive our nation's economy toward the cliff's edge.
Both parties' congressional leaders reportedly came to a tentative agreement regarding the bailout plan. Instead of appropriating $700+ billion now, they've agreed to give Treasury Secretary Henry Paulson $250 billion now, $100 billion later (if the White House certifies the need -- whatever that means), and another $350 billion if Congress feels generous.
It's the oldest sales technique in the book, called "Door in the Face."
Simply put, the Door in the Face Technique entails a salesman's offering a product at an outrageously huge price -- knowing that the potential sucker will likely slam the door in the salesman's face.
Then, the salesman comes back and tries to sell the product at a lower price -- expecting the sucker to feel relieved (perhaps falsely) by the lower price.
Consistent with the Door in the Face Technique, a U.S. Treasury spokesperson admitted last week to Forbes Magazine that there was no real math behind the Bush Administration's $700 billion price tag for the bailout. Instead, the spokesperson said:
"It's not based on any particular data point.... We just wanted to choose a really large number."
Mission accomplished. That's a blatant admission that Bush Administration officials were simply spinning and attempting to manipulate us taxpayers and our representatives in Congress.
If we have to bail out Wall Street firms to save our nation's economy, a pay-in-phases approach seems smart.
But why a full $250 billion up front -- followed by $100 billion from the White House, which has already expressed eagerness to transfer truckloads of cash to Wall Street execs?
Though "only" half of $700 billion, $350 billion is still a ton of money. Our nation's largest drug companies (among the world's most profitable entities even during economic slow downs) don't collectively make $350 billion in annual profits.
That $350 billion that Congress wants to give to Wall Street is about 10% of our nation's entire annual budget. Our national debt is now $9.8 trillion, and interest accumulates daily.
That $350 billion could help pay down our enormous debt. Even the interest that our treasury would earn on cash that we delay funneling into Wall Street execs' pockets could help pay down our debt.
Last week, at a Senate Banking Committee hearing, Sen. Chuck Schumer asked Treasury Secretary Henry Paulson how he came up with the $700+ billion figure. Paulson said that he'd guessed that the Treasury would hand out $50 billion a month.
To that, Sen. Schumer asked the $550 billion question: why shouldn't Congress give only $150 now and give more later if the bailout is working?
It's outrageous that the first cash-drops will likely be more than one-third of a trillion dollars -- especially given that Treasury officials have admitted to having no real idea of the bailout's real price tag.
Shouldn't our taxpayer-funded political officials seek to protect our tax dollars and proceed with caution?
Memeorandum has commentary.
Other Buck Naked Politics Posts: