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The word 'bailout'

People should read Matthew Yglesias's post on the increasingly destructive role the word "bailout" is playing in our public discourse. Like Matt, I've heard pretty much every policy people don't like referred to as a bailout. Money to pay teachers is called a bailout. Monetary stimulus is called a bailout. Paying our IMF dues while the IMF makes a loan to Greece is called a bailout.

For one thing, we need a better definition of a bailout. I'd say it's something like "putting public money into a firm that's insolvent because of poor business decisions." Conversely, putting money into South Carolina's schools to blunt the cuts required by plummeting tax revenue caused by a financial-sector crisis isn't a bailout. You may think it's good or bad policy, but it's not a response to epic mismanagement on South Carolina's part. Unemployment insurance, which helps workers who were laid off after the credit markets froze up and their employer could no longer access capital or find people to purchase goods, is also not a bailout.

Meanwhile, helping Greece may be a bailout, but even that doesn't make it a bad policy decision. So on the one hand, the word "bailout" is being used promiscuously and inaccurately. And on the other hand, it doesn't even tell you that much when it's used correctly.

By Ezra Klein  |  June 9, 2010; 4:20 PM ET
Categories:  Economic Policy  
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Comments

We have plenty of money for bombing scary brown people. Given how much hatred we create, maybe we should call the DoD Al Qada's "bailout."

Posted by: AZProgressive | June 9, 2010 4:40 PM | Report abuse

This is just one more example of the epidemic of selfishness and ignorance about how interconnected things are that has gripped our populace in these hard times. "Bailout" simply means "someone besides me" is getting money. People don't seem to understand that throwing teachers out of work (1) reduces the aggregate consumer spending that fuels our economy and will eventually get people back to work; (2) leads to larger class size, more dropouts and a less-educated workforce; and (3) 1 and 2 are harder to reverse once they get going.

Study after study shows that you get the most bang for the buck with unemployment insurance, food stamps and preventing local government lay-offs. Much bgetter than tax cuts, especially tax cuts for the rich.

Furthermore, the people whose taxes are going to be raised to pay for this ARE THE RICH, that is, people making above $250,000 in incomes. True, the TV and pundit press make it seem worse because they are always whining about taxes going up because they are in the $250,000 and up club. But this is a tiny minority, around 1.5% of US households, if memory serves. These folks have over 50% of the wealth in this country, so of course they have to pay. They are also the ones whose incomes have gone up, and taxes gone down, over the past 15 years.

Posted by: Mimikatz | June 9, 2010 4:55 PM | Report abuse

If the last decade has taught us anything, it is that the correct use of words is no longer required.

Death panel was applied to a GOP lawmaker's amendment that would have paid for counseling.

Socialist is applied to damn near anything Barack Obama can think of.

Pretty soon up will indeed mean down, except occasionally when it will mean socialist death panel.

Posted by: RalfW | June 9, 2010 5:01 PM | Report abuse

That is to say, Ezra, that we do not need a better definition of 'bailout.'

We need a political class that is ashamed of flat-out lying. And I don't see that coming.

Your gentle call for a better definition would be charming if it weren't dangerously naive.

Posted by: RalfW | June 9, 2010 5:16 PM | Report abuse

you're right. But then again someone I know is calling the end of their daily blog posts "reconciliation" and spent a post on it a couple of months back finding a name for it and settled on that to mock or degrade those on the right that called budget reconciliation "reckless" and called it circumventing the normal process and some blogger went out to normalize the name by using it on a daily basis.

Posted by: visionbrkr | June 9, 2010 5:25 PM | Report abuse

and I don't know anyone (I sure don't) that wants to "throw teachers out of work" as MimiKatz suggests.

What I and I hope and expect many conservatives want is the abuse of public dollars to stop. Heck I'll sign today for it to SLOW DOWN. Don't lay them off (like millions in the public sector have). Just stop taking pay increases until the tax base re-establishes itself. Is that too much to ask? I'm guessing YES if you ask SEIU, AFSCME, AFL-CIO, CCWA etc.

Posted by: visionbrkr | June 9, 2010 5:27 PM | Report abuse

I agree it is naive to think a new definition would change anything. Shows Ezra's youth and inexperience.

Posted by: Lomillialor | June 9, 2010 5:58 PM | Report abuse

I'd call it them "clean-up costs".

Posted by: JPRS | June 9, 2010 6:01 PM | Report abuse

--"[P]utting money into South Carolina's schools to blunt the cuts required by plummeting tax revenue caused by a financial-sector crisis isn't a bailout."--

You saying that government schools aren't typically insolvent because of poor business decisions?

Put their funding on the same voluntary basis under which General Motors used to operate and see how long they stay "solvent".

And for those of you too dim to follow that, Klein has made an error in logic.

Posted by: msoja | June 9, 2010 6:31 PM | Report abuse

@visionbrkr: Your reflexive anti-unionism is duly noted. Where I live, teachers and all public employees have taken either pay freezes or furlough days or both. Unpaid furlough days are defacto pay cuts and all state employees (except fire and police) are forced to take them.

I want the abuse of public dollars going to no bid, cost plus contracts to stop. A lot more money is wasted in the defense budget than is spent on education.

Posted by: srw3 | June 9, 2010 6:42 PM | Report abuse

Visionbreaker: Local governments that hire teachers are falling behind in revenue because incomes are down because of the financial/housing crisis and attendant recession, and so sales and income taxes are down. But there are the same number of kids in school, and some places like CA the schools are chronically underfunded because the taxpayers don't like to pay for the education of "other people's (i.e. non-white) children."

Layoff notices have gone out to teachers all over the country because of shrinking state and local revenues coupled with balanced budget requirements. That's why Ezra referred to "putting money into South Carolina's schools to blunt the cuts required by plummeting tax revenue caused by a financial-sector crisis".

Government isn't a business. I don't want less police and fire protection or schools when revenues are down. It would be nice if conservatives understood the concept of investment in public goods (like education) that pay dividends down the road. But the underlying needs that government meets don't go up and down with revenues--often the needs are greater when there is a recession because gov't has to pick up the slack. It's called Keynesian economics.

It would be nice if government at all levels ran a rainy-day fund for hard times, but everytime there is a surplus the conservatives scream for tax cuts and rebates. And of course no one on the right minded when we pissed a trillion dollars away on Bush's stupid wars and the tax cuts for the people whose icomes have gone up by 175% between 19789 and 2005 while everyone else's income was basically flat.

Posted by: Mimikatz | June 9, 2010 6:53 PM | Report abuse

addition "wasted in the defense budget than is spent on education by the federal government."

Posted by: srw3 | June 9, 2010 7:02 PM | Report abuse

--"It would be nice if conservatives understood the concept of investment in public goods (like education) that pay dividends down the road."--

Paying for other people's children to flunk out of schools that are social cess pits doesn't "pay dividends down the road". Paying for bloated bureaucracies whose main mission is to funnel union dues and votes to socialists of American in an investment in failure.

Posted by: msoja | June 9, 2010 8:30 PM | Report abuse

Visionbreaker: Local governments that hire teachers are falling behind in revenue because incomes are down because of the financial/housing crisis and attendant recession, and so sales and income taxes are down. But there are the same number of kids in school, and some places like CA the schools are chronically underfunded because the taxpayers don't like to pay for the education of "other people's (i.e. non-white) children."

---------------------------------------

please don't tell me you're accusing me of being a racist are you? and I was never a fan of Keynes. Sorry.

And at the end of all of this I'd love to see the TRUTH about teacher layoffs. My district for example talked of 100-150 layoffs. Our school already announced everyone's back next year. Wil some be laid off, I'm sure they will. Will it be as bad as progressives would lead you to believe, NO. Will it be even close to the private sector? NEVER.


srw3,

see there you go assuming about me again. I want the waste in no-bid contracts to stop too. They're WORSE to me than the so called "bailout" as Ezra put it but that's not what the topic is, is it? I'm all for cutting the defense budget. In fact let's get the heck out of Iraq and Afghanistan and make sure we NEVER go into Iran. We never should have been in ANY of them. Then we wouldn't have to do any of these cuts. But again just because we'd do that doesn't mean we have to give a blank check to ANYONE. That means banks, pharma, unions etc. The fact that you assume I'm you're garden variety conservative and we're all the same tells me you're not really listening to what I'm saying.


OH and MIMI,

the war in Afghanistan is now ALL OBAMA.


Posted by: visionbrkr | June 9, 2010 9:02 PM | Report abuse

I don't understand this impulse to blame massively complex problems on one person. There's simply no universe in which Afghanistan is "all Obama". He didn't decide to send troops there in the first place. He didn't handle the crucial early years. He didn't start another conflict before finishing this one. Yes, he has been president for a year and a half. Yes, he has sent more troops there, and no, it doesn't look like there's a firm timetable to get them all out. So he's involved, certainly, but it's no more something that he has sole responsibility for any more than the financial meltdown is solely his (and I'm not even just saying it's Bush here. I'm throwing most of the presidents from the last 35 years in there too.), or the oil spill is solely his.

Healthcare reform is all Obama's, but it won't stay that way. When another president takes over they'll have to make decisions on how to implement it and change it and will therefore take responsibility for it as well. We don't start the country fresh each time someone new takes over, and simply carrying the ball down the field a bit doesn't mean someone else didn't carry it for a few yards before you.

Posted by: MosBen | June 10, 2010 9:39 AM | Report abuse

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