Editorial: Bailing Out Little Brother
As ALG reported last week in the piece “Birds of a Feather,” President-elect Obama has a dream, and that is to take the bailout game one step further. To the joy of many Democratic governors and legislatures across the nation, Mr. Obama would like to bailout many of the states who will, due to excessive spending, struggle futilely to submit a balanced budget next year.
Enter Republican South Carolina Governor Mark Sanford. Mr. Sanford has made vetoing unnecessary spending bills second habit since being elected to governor. Sanford even traveled to Washington, D.C. in October to tell the U.S. House Ways and Means Committee not to approve a $150 billion stimulus package.
Mr. Obama's state welfare plan calls for funding for infrastructure, renewable energy and a host of other handouts. In an interview with Stateline.org, Governor Sanford simplifies the problem with this gravy-train style state welfare so that even a politician can understand:
“I've got nothing against infrastructure. I love infrastructure. It's important… But you've got to distinguish between funding infrastructure and borrowing to fund infrastructure.”
He went on further to say, “There's just something mathematically and morally wrong with having folks from across the country go out and bail out states that in many cases, spent at a faster rate than the federal government.”
Since the bank bailout passed in October, the political class in Washington has started a dangerous trend. In November, Congress sought to bailout the Detroit 3. Unrest at the local level, however, prevented them from passing any legislation. It is expected that this issue will be revisited in January when Mr. Obama takes the helm and unlatches the coffers.
It would seem like common sense that when pursuing the problem of rampant overspending, the first action cannot be to simply throw more money at it. The problem with the American auto industry is not that they need more money. The problem is that excessive union demands have made the industry unprofitable no matter how much money the Detroit 3 may make. For example, in 2007, the General Motors plant in China made over $1 billion in profit. China is not unionized, keeping costs lower. The best solution for the auto industry would be for them to declare bankruptcy then rebuild with little or no unionization. If that means they have to put plants in foreign countries, then joi gin, Detroit 3.
Congress and the incoming President Obama will doubtlessly continue to turn towards the bailouts, leaving the only hope with Conservative governors such as Mr. Sanford, Sarah Palin, Tim Pawlenty, Bobby Jindal, and a handful of others. Otherwise, the states, with the aid of Mr. Obama, may continue trying to balance their budgets on the back of a federal government that is already woefully out of balance itself.