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BEHIND THE NEWS: What does a bailout mean?

January 27, 2009 1:05:52 PM PST
You can't be a little bit pregnant. My dad used to say that. It wasn't his expression alone of course, but I'm reminded of it today, watching the Obama Administration go through the contortions of trying to manage a taxpayer-funded financial institution bailout.

When the government gives public money to private corporations, what strings are there? What conditions should apply?

If you loan money to a friend, are there conditions? Maybe implied conditions. If your friend says she's short this month for rent, and then you loan her money and the next week she heads to Europe for a week's vacation, what standing do you have? Was she short on rent because she had already planned her vacation? Should she have told you she was short on vacation money instead?

I don't have the answer. What I do know is that money creates problems, and we are seeing those problems right now.

We are, to paraphrase my dad, a little bit socialistic.

When we give bailout money to Citigroup, do we tell them what they can or can't spend money on? If we do, then are we loaning them the money or are we taking over?

Private jets may not be politically correct these days for companies that take government bailout money, but they have been a way of life for business for years. Citigroup was all set to take delivery of a new $45 million corporate jet; but now the Obama Administration is saying it is "unacceptable" and is asking them not to buy the jet. (And just to pile on: The jet is French-made.)

Taxpayers who are struggling to keep their jobs and pay their bills are angry, and who can blame them? But if a corporate jet is a worthwhile business expenditure, then who decides when a company should NOT have one? The company? The government, if it's chipping in billions in bailout money?

There's no easy answer - and I'm not for a second suggesting that taxpayers should be on the hook for various corporate perks. But it is like being a little bit pregnant. If we're bailing out these private corporations because they made bad decisions, then let's take them over. If we're not going to take over, then let them live or die on their own merits.

It's the same-old conundrum: We're privatizing the profits, and socializing the losses. It's a great deal for corporate execs, but it's just not right or fair for the rest of us.

Meanwhile, Pres. Obama and his staff are trying to convince Congressional Republicans to pass his $850 billion economic stimulus package. GOPers are not pleased with the increase in government spending, so a compromise could be in the works.

We'll have the latest on the economy - and the bailout - tonight at 11.

We're also bracing for yet another winter storm. Lee Goldberg is tracking it for us tonight, and says get ready for snow and ice.

We'll have any breaking news of the night, plus Scott Clark with the night's sports. I hope you can join Liz Cho and me, tonight at 11.

BILL RITTER


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