Tag Archives: Bank Bailout

Trump supported the bank bailout and auto bailout, Cruz opposes all bailouts

Donald Trump and his friends, the Clintons
Donald Trump and his friends, the Clintons

I have two friends who are Trump supporters. I’ve been going over Trump’s record with them, and I thought that I would blog some of the evidence I presented here.

Now, the conservative view of bailouts is that we should not have them, because in a free market economy, companies that cannot serve customers efficiently (low price, high quality) must be allowed to go bankrupt. That includes banks and auto manufacturers.

Where does Trump stand? Here is a transcript of an appearance on Fox News from 2008, where he embraced the bank bailouts:

NEIL CAVUTO, HOST: Well, Donald Trump saying, anything close to that $700 billion bailout would be a black eye for an economy he says rushing into one big depression.

Real estate mogul Donald Trump joins me now on the phone.

[…]

TRUMP: […]Now, I did not know about a $700 billion bailout, in all fairness. And I think probably, it is something — it’s sad, but, probably, it’s something that has to get done, because your financial system is most likely going to come to a halt if it does not. So, it is a pretty sad day for this country.

This Daily Caller article explains Trump’s view on auto bailouts:

Faced with crushing debts caused by poor management and high labor costs, GM and Chrysler requested federal assistance to keep the firms afloat, and were granted a $25 billion loan in the fall of 2008. President George Bush then secured more than $17 billion for the companies.

This occurred months before the birth of the Tea Party, but conservatives were outraged.

Not Trump. A longtime advocate of sweetheart deals between corporation and state, the real-estate developer went all in for the deal.

“[Y]ou have to try and save the companies,” Trump said in a separate 2008 Fox News interview. “And I think you can easily save the companies.”

Ted Cruz opposes auto bailouts and bank bailouts.

Cruz was asked in a 2012 run-off debate if the federal government should have bailed out General Motors, and here is his answer:

Of course we shouldn’t have. We’ve got a problem in Washington. We’ve got career politicians in both parties that spend the taxpayer money. That’s how we’ve gotten a $16 trillion dollar debt that is bankrupting our country. I don’t support bailouts, period. I don’t support the bailout of the auto companies. I don’t support the bailout of the banks. Government shouldn’t be in the business of spending taxpayer money to help private corporations. The role of government is to protect our rights, to protect our national security, to ensure rule of law and to stay out of the way and let entrepreneurs create jobs. And the problem with Washington is career politicians spending money and digging us into a hole that is threatening the economic future of our nation.

Cruz doesn’t even like the government giving companies subsidies, much less bailouts. It’s taxpayer money, it should not go to corporations that cannot compete fair and square.

Trump also supported Obama’s pork-filled stimulus spending bill:

President Obama held his first prime-time press briefing — designed to build support for the economic stimulus package that was his top priority upon taking office — on Feb. 9, 2009. Later that same night, real estate mogul Donald Trump took to the airwaves to sing the plan’s — and the president’s — praises.

“I thought he did a terrific job,” Trump told Fox News’s Greta Van Susteren. “This is a strong guy knows what he wants, and this is what we need.”

“First of all, I thought he did a great job tonight,” said Trump. “I thought he was strong and smart, and it looks like we have somebody that knows what he is doing finally in office, and he did inherit a tremendous problem. He really stepped into a mess, Greta.”

Van Susteren then asked Trump if a simple payroll tax holiday might be a better way to stimulate the flagging economy. Trump, however, held firm in his support for Obama’s plan, which he praised for the wide breadth of approaches it took to combatting the crisis.

[…]“Well, I have analyzed the bill as closely as it can be analyzed in this quick a period of time, but he’s really got a combination of both,” Trump replied. “He is doing the taxes, he is doing rebates, and he is also doing lots of public works.”

His support for public works spending reminded me of a chapter from Henry Hazlitt’s “Economics in One Lesson” on public works, in which he explains that public works can never stimulate the economy, since it takes money out of the productive private sector and spends it in the wasteful and corrupt public sector. The chapter is entitled “Public Works Means Taxes”.

It says:

Two arguments are put forward for the bridge, one of which is mainly heard before it is built, the other of which is mainly heard after it has been completed. The first argument is that it will provide employment. It will provide, say, 500 jobs for a year. The implication is that these are jobs that would not otherwise have come into existence.

This is what is immediately seen. But if we have trained ourselves to look beyond immediate to secondary consequences, and beyond those who are directly benefited by a government project to others who are indirectly affected, a different picture presents itself. It is true that a particular group of bridgeworkers may receive more employment than otherwise. But the bridge has to be paid for out of taxes. For every dollar that is spent on the bridge a dollar will be taken away from taxpayers. If the bridge costs $10 million the taxpayers will lose $10 million. They will have that much taken away from them which they would otherwise have spent on the things they needed most.

There is no free lunch. Someone has to pay.

Listen to me. This economy is not doing well. We are going to have more debt, higher taxes, and lower public services the further we go down the path of socialism. It’s fun to spend money on all sorts of bailouts, but the money is not unlimited. Bailing out private businesses and giving them subsidies costs taxpayer money. Eventually, that runs out. We need a candidate who understands this, and that candidate is Ted Cruz, not Donald Trump.

Have the Democrats finally stopped spending money on bailouts?

The AP reports that bailout spending is ongoing, despite Treasury Department claims that bailouts are over. (H/T ECM)

Excerpt:

The Treasury Department says its bank bailouts are over, but the spending continues.

In a Sept. 22 speech, Treasury Secretary Timothy Geithner said the bailouts “are completely behind us.”

That’s not quite correct. In the final six months in which it could spend money from the Troubled Asset Relief Program, Treasury set aside $243 million for new contracts for law firms, accountants and money managers to help run what’s left of the bailouts – on top of the $529 million already spent on work by staff, private companies and other agencies. Many of the contracts last until 2019, and there’s nothing to stop the government from hiring even more help if it’s needed to chase down the remaining bailout money.

Treasury’s authority to spend more from the $700 billion fund expired on Oct. 3. The law requires officials to recoup as much as possible of the $185 billion still in the hands of shaky private companies. After all collections are made, the government expects to be out about $51 billion, mostly from housing programs.

Rising voter anger ahead of next week’s elections has made Obama administration officials reluctant to speak candidly about the ongoing cost of managing TARP. Politicians who voted for the TARP law now face tough re-election fights. By downplaying their efforts, officials sidestep criticism of bailouts that helped Wall Street without easing lending or keeping many people in their homes.

A government watchdog said this week that public statements by Treasury officials around the Oct. 3 deadline appeared designed to create a mistaken sense that TARP is over.

“The idea that TARP is dead is just not accurate,” said Neil Barofsky, the special inspector general overseeing the program, in an interview. “People can write its obituary, people can declare that it’s been put out of its misery, but there’s still close to $180 billion of TARP money outstanding, and $82 billion obligated to be spent.”

ECM also sent me this article from the Heritage Foundation which explains how to cut $343 billion from the federal budget without breaking a sweat.

 

TCF Bank returns TARP money, rejects government interference in business

Representative Michele Bachmann
Representative Michele Bachmann

On Michele Bachmann’s blog, she has posted twice about banks that are returning TARP bailout money, rather than accept government control of their business. Michele voted against the TARP bill, which redistributed 700 billion dollars from the honest/productive sector of the economy to the irresponsible/fraudulent sector.

Here is an except from her first post:

The Minneapolis Star Tribune reported yesterday that TFC Financial Corp. has joined Northern Trust and Iberiabank Corp. as financial institutions who are staying clear of the government’s Troubled Asset Relief Program.

The way TCF Chief Executive Bill Cooper views it:

“I don’t want to be part of the new regulatory regime that’s growing up around TARP. Congress is now talking about putting their oar in the water on just about everything we do. That puts us at a competitive disadvantage.”

A more recent post links to a Fox News story on TCF bank. According to the TCF Bank CEO, TCF never made any subprime loans, and therefore they do not need a bailout. Although they were going to take the money, they decided to return it, because they refused to yield their autonomy to the federal government.

Watch the 5-minute clip: (need I mention that Megyn Kelly does the interview?)

Now, for those of you who have read F.A. Hayek’s “The Road to Serfdom”, you know that all our liberties, including our precious freedom of religious expression, hangs on the separation between government and the means of production. If the government controls the means by which you earn your living, then the government controls you.

A summary of the Road to Serfdom is here.