Chutzpah: main symptom of bailout fever

January 03, 2009|By JAY HANCOCK | JAY HANCOCK,jay.hancock@baltsun.com

Who wants to be a bailout recipient? We do! say the steel companies.

Not content with what is likely to be the biggest public works program in decades, Big Steel wants to ensure taxpayers buy bridge, road, school and electric-grid steel only or largely from U.S. producers.

Every provision in Congress' forthcoming stimulus should contain "a buy America clause," Nucor CEO Daniel R. DiMicco told The New York Times.

What a good idea. The Buy America Act of 1933, signed by Herbert Hoover as he exited his miserable presidency, fueled a global trade war that hurt American exports and made the Great Depression even greater.

Don't look for Iran or Russia to be first to test the inexperienced President Barack Obama. The likes of the American Iron and Steel Institute and the National Association of Real Estate Investment Trusts will probably beat them to it. Everybody wants some pudding.

Retailers have asked Washington to stop states from collecting sales tax during 10-day periods in March, July and October.

"The situation is critical," the National Retail Federation wrote to Obama.

Maybe, but it's tough to see how tax holidays would help. Consumers would just switch shopping from taxable weeks to nontaxable ones. Stores would raise prices, pocketing what's normally collected by government. Washington would have to reimburse states for billions in lost revenue.

The only thing dumber would be bailouts for newspapers.

"The media is a vitally important part of America," Connecticut legislator Frank Nicastro told Reuters, which reports he has asked government to save two small papers in that state.

Commercial real estate developers, apparently jealous that they didn't mess up as badly as their residential real estate colleagues and have received no taxpayer gravy, are lining up with bowls.

They want to include mall and hotel loans along with credit-card and auto paper in the assets the Federal Reserve accepts as collateral for one of its slush funds.

There is "insufficient systemic capacity" to refinance expiring commercial real estate loans, a dozen trade groups wrote to Treasury Secretary Henry M. Paulson Jr., according to The Wall Street Journal.

But everybody's having trouble rolling over debt.

Including music companies. They've been plastered by the Internet and the recession almost as badly as newspapers and magazines.

CNET blogger Matt Rosoff wrote a piece favoring federal spending on stipends for musicians, nightclub tax breaks and concert hall construction budgets.

"It's not enough to give the big labels and radio stations a few hundred million dollars to stem their losses and encourage reinvestment," he wrote. "Instead, we need to create a culture of music appreciation and nurture the talent that will lead to the next generation of musicians."

Universities want a bailout. Honchos including University System of Maryland Chancellor William E. Kirwan wrote Obama asking for "a commitment of 5 percent of the economic stimulus package - in the range of $40 to $45 billion" - to be spent on higher education.

(Unlike most proposed rescues, this could be well-spent if it boosts college attendance and gets more American kids into engineering and technology.)

First prize for bailout chutzpah is competitive, but the ethanol industry is a strong contender. It wouldn't even exist without enormous federal support, but now it wants $1 billion in short-term credit and $50 billion in loan guarantees, says Congressional Quarterly.

"Some have misconstrued this communication as a request for federal assistance or a bailout," says the Renewable Fuels Association, the ethanol lobby.

There is already a chicken bailout. The Agriculture Department just announced plans to buy $42 million of poultry parts for school lunch programs.

Can a dairy bailout be next?

Kathleen Falk, county executive for Wisconsin's Dane County, wants Obama to buy manure processors for dairy farmers, reports The Capital Times of Madison, Wis.

And so on.

It began with the banking rescue. That makes sense, although it's being handled in a terribly secretive and seat-of-the-pants way. Because financiers make everything else in the economy happen, they are the logical receptacle for bailout largess.

But the extension of welfare to the automobile industry has launched pleading inside and outside the Beltway that will get worse when Congress convenes. Everybody wants the same action as General Motors and Chrysler.

Here is a good rule of thumb for Obama. Lenders, at the top of the economic food chain, need bailouts to stay solvent and finance investment. Consumers, at the bottom, need bailouts to spur demand and reduce misery.

All other supplicants should be eyed with a baleful and skeptical stare.

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