The fact that GM is paying back the bailout “loan” to the government actually proves nothing about the overall justice of the bailout. The loan and the repayment are only two of the four transactions actually involved in a fully just arrangement. Follow the logic in this thought experiment:
1. Party A is in dire straits, so A goes to party B to borrow money. Party B wants to lend money to A, but B does not have the cash, so B borrows the necessary cash from party C and lends it to A. A takes the cash, covers its obligations and makes whatever structural changes are required to get out of the red. Surely enough, A returns to profitability and pays back B with interest.
2. The problem is that B is still obligated to C, and until B pays back C with interest, B is sitting on a pile of cash that was not B’s to begin with. If B never pays C back, it’s fair to regard B as having simply taken the cash from C.
3. In this little parable, Party A is Government Motors, Party B is the Obama regime, and Party C is the collection of taxpayers who are yet to be born to us and to our children, those who will eventually have to come up with the cash to underwrite this little escapade.
4. A truly just outcome to the GM bailout would be for the government to distribute the cash proceeds of its bailout loan back to us in the form of private trust accounts, distributed among actual income taxpayers in proportion to each taxpayer’s current-year contribution to the government’s total income-tax revenue. These accounts would be privately owned by us, the taxpayers, and we would be free to invest them however we see fit to avoid losing the value to inflation.
So the money flows from our posterity, through the White House as middleman, to a single, private company (GM); thence back to the White House, where it stops and remains at the political discretion of the Occupant. It never gets back to its source: us, our children, and our grandchildren. And if it’s true, as my friend TommyT says, the “repayment” cash just came from another taxpayer-underwritten slush fund (TARP #2) also given to GM by the middleman, the obscenity of this whole ruse has reached almost indescribable proportions. And it is a ruse, a political ruse, aided and abetted by rhetorical…well, rhetorical offal. (See H. G. Frankfurt for a more rigorous and hilarious treatment.)
The perceptive reader may protest: “Well, not exactly! What will actually happen is that the government will issue debt instruments to generate the cash for the bailout. It won’t come directly from our children.”
Yes, but who will underwrite that debt? Who is on the hook for it when, not if, but when we have to issue a second round of debt to cover our obligations in the first round of debt? And after the cascading debt ends up jacking up interest rates and crushing the dollar? If you said “our children,” go to the head of the class.
These are high crimes and misdemeanors. Against us, against our posterity, and against the Republic itself.