Ronald Reagan once said that government’s view of the economy can be boiled down to this: If it moves tax it, if it keeps moving regulate it, if it stops moving subsidize it.
Although he was half-joking at the time, his statement I’m sure strikes more than one raw nerve considering the current financial maelstrom that has engulfed both Wall Street and Main Street.
One can only imagine The Great Communicator’s take on the amount of pork contained in the $700 billion bailout package recently passed by both the House and the Senate and signed by President Bush.
We can all relate to the $2 trillion-plus lost in retirement accounts, configuring many 401(k)s into a faint approximation of what they were worth even six months ago. But what about small business owners who have seen their credit lines evaporate quicker than cash bar customers at a wedding?
Enter a proposal for an Emergency Stabilization Fund from Sen. Hillary Rodham Clinton, D-N.Y., who has floated the idea of the $150 billion plan to help small businesses, universities, students and municipalities cope with the credit crisis.
Normally the very mention of her name as well as her New York Senate colleague Charles Schumer are as welcome as a dorsal fin at a shipwreck at Chez Carlino, but as entitlements wedged in legislation go, this isn’t a terrible one.
The senator said the money would come from the larger bailout package and the proceeds would be earmarked for emergency loans and establish temporary lines of credit for small businesses. The plan would also enable schools and universities to receive short-term access to financing in an effort to boost direct loans to students.
Senator Clinton has also proposed dedicating $100 billion in new Treasury security revenues to take advantage of historically low Treasury Bill yields.
I won’t begin spouting — or writing as the case may be —boilerplate clichés about how small businesses help drive the economic engine of the country, but according the Small Business Association, the implosion of the credit markets has predictably made it very tough for small businesses to obtain SBA-guaranteed loans from banks. In fact, the SBA said that the number of its 7(a) loans is down 30 percent in year over year comparisons.
Although I – and I’m sure many others — can debate the merits of the bailout package, it would basically suck if only the mammoth companies received a lifeline while the 20 or so million small businesses were advised to learn the techniques of treading water.
The economy has stopped moving and former President Reagan’s wry remark about subsidizing isn’t nearly as funny as it used to be.
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