The Big Bailout: A Taxpayer Does the Math and Writes a Letter
When do taxpayers finally get angry enough to tell Congress that with the big bailout, the subsidy bonanzas stop here and now?
Someone I know was planning to buy a house. But after calculating the likely tax hit from the $700 billion mortgage crisis bailout, he's not sure he can afford it anymore. His mistake was that instead of borrowing and spending beyond his means, he has been a thrifty, hard-working American, supporting a wife and a couple of kids, paying his bills in full and on time, and forking over a big whack of his earnings every year to the tax man.
Congress has repaid him with policies that produced the current financial crisis. For him, the bottom line is that he will now be so busy working to pay for other people's houses that he may no longer be able to afford one of his own. So he's written a letter to his congressman, giving one of the best summaries I've seen of the problem, the cause, and, what it means for him, as a member of the American Middle Class. With the names edited out, here it is --
I am a Professor of Economics at a college in your district, and believe I understand the current economic condition at least as well as most. The root of the current crisis lies in the Community Reinvestment Act, which is essentially an income redistribution plan. I have been taxed heavily over many years. Based on the ratio of the current plan's cost to total annual tax receipts taken in by the federal government (about 27%), and my tax bill last year, I estimate the bailout will cost me, personally, $20,000. After all, money for this comes from me, the taxpayer, and I do not expect congress will have the guts to find $700 billion in cuts to offset the cost of this program. At the same time, I will need to buy a house next year in your district as I am no longer eligible for college-subsidized housing.
To put this simply, I can either afford to bail out irresponsible lenders and borrowers created by a huge redistribution policy I have already subsidized in the past, or I can buy myself a house. I don't think there is room in my budget for both. How should I feel if the federal government decides on the former?
An American Taxpayer
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