My son Levi had an accident this week. He was trying to get back a large stuffed bear from one of his friends when he fell backwards and hit his head on a rolling cart. The hit left about an inch long gash in the back of his head that required 10 staples to close up. He is doing fine and in a couple of days the staples will come out. He will have a scar, but because of where the gash is it won't show because of his hair.
The current bailout (or rescue plan) feels the same to me. It feels like we have been trying to get back our stuffed bear and took a fall that left a gash in our head. The staples to "fix" this gash is what our leaders are calling a bailout/rescue. Instead of an insignificant number of staples there are $700 Billon worth of staples to try and get the economy flowing. If it passes the bailout will leave a scar on the economy. The scar comes in the form of government ownership and functioning of the companies who take advantage of the bailout.
I'm not saying that this isn't needed. There is a gash that needs fixing. What I'm worried about is how ugly the scar will be. There have been several opinions on what will mend the gash. I don't think the bailout plan is the best. I believe there are other things that can be done to mend the wound and reduce the ugliness of the scar. One such plan is being touted by Dave Ramsey. The plan is here. The plan involves changes to Government Backed Insurance, Mark to Market Account Rules and the Capital Gains Tax.
Dave's plan does require some government spending, but $50 Billion is a lot easier to swallow than $700 Billion. It also does not require that there is Pork spending in order to have a majority in the Senate and House pass legislation. What we need now from our leaders is common sense and not knee-jerk reactions that will only help in the short-term. I'm hoping that there are enough leaders in Washington who will look to a common sense solution that will benefit us in the long term as well as help alleviate the current credit crisis.
Unlike my son whose staples will be removed after about a week, the economy has no such time frame for taking out the staples. It is unfortunate that we got into this situation. It is unfortunate that our leaders act like third graders and point the finger at each other. It is unfortunate that the thinking is that we need to go further in debt to relieve debt. This last statement is part of the American problem where we feel that it is OK to use debt to relieve debt. Things have to change and we as a people should let our leaders know that common sense is needed instead of knee-jerk reactions.