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Northwest Voices

Seattle Times letters to the editor

November 27, 2008 at 5:44 PM

Economic crisis

It’s time for an income tax

Dear Gov. Christine Gregoire and Washington state Legislature:

Lower-middle-class voter here. Congratulations on being re-elected. Now, please do the honorable thing, the right thing, the responsible thing. Fall on your own swords and implement a state income tax. It’s probably true that your elected careers will be over, and full disclosure forces me to admit that in this economy you will have a hard time finding new jobs. But we need you to do this.

I cannot spend money I do not have anymore just to fill the state coffers with sales-tax receipts. Truthfully, I feel like we all overconsume and it’s not good for the planet.

I don’t want higher education, health care for poor families and classroom size determined by how much I spend at the mall. So please, cut all the wasteful spending, see if you can give us a break on the sales tax, and seize this moment for change.

Think of it as tough love, because the case for why we need a state income tax has never been clearer.

–Carol Mabbott, Seattle

Not over yet

The monstrous federal bailout gets bigger every day, with insurance companies demanding money first, then banks, then GM, Ford, Chrysler, the state of California, some 60 cities — and now even one of the guys I work with wants a billion dollars. The money we are throwing at this problem shows absolutely no sign of doing any good.

Politicians are all afraid to be the first one to tell the American public the truth: Those banks, insurance companies and a thousand more like them are far more bankrupt than you could ever dream, and thus throwing them money keeps the CEOs employed, but is totally worthless for all other tasks.

They haven’t lent a dollar bill to the public yet.

Some of President George W. Bush’s economic advisers estimate that the top nine banks and insurance companies bet and lost some $63 trillion on credit-default swaps. Those are the secretive “bad assets” that everyone talks of, but no one will list. They owe that money to someone. And we are foolish enough to try to clean their books with a microscopic amount like a $700 billion bailout? That is 1/90th of what they need.

There is not enough bailout money on the planet to fix this problem, so we continue this charade of throwing a billion here and there just to show Americans Congress is doing “something.”

Be realistic for a moment. Is it conceivable that barely 5 percent of Americans who just might default on their mortgages could wreak this much havoc on the entire world monetary system?

One of Bush’s advisers said we cannot fix this unless we invent 100 “clean” banks — two per state — and give them the bailout money. Every existing bank must be suspected of being bankrupt, so even honest banks won’t loan to other banks for fear of losing the money they still possess. These 100 “clean” banks would lend only to the public — problem solved.

Why are GM, Chrysler and GE in such a mess? Because they fired their engineers when Bush was elected and hired loan sharks. They have lost untold billions trying to lend money at usurious rates.

They borrowed $60 billion two months ago, got $25 billion last month and now want $50 billion more. It is possible that the entire $700 billion might not even be enough to cover GM, Chrysler and GE’s true losses, much less fix the economy as a whole.

Bush has it wrong. These crooks are not too big to fail. They are so big and owe so much money that in the long run, we cannot save our country and our financial system unless they do fail.

— Leon Howell, Spokane

The world will keep on turning

It is a slippery slope that the American government is climbing by investing tax money into publicly traded corporations.

The basics of economics teaches that risk premium is one of the considerations when calculating the value of an asset. If the government steps in to remove the risk, then how can our economic model continue? Is corporate bankruptcy a bad thing?

A historical example is when Pan Am (the airline) was on the verge of going under. The call at the time said that Pan Am had to be saved at all costs, or it would be too devastating for the American airline industry. Well Pan Am went under and the world kept turning. They said the same thing about deregulating the airline industry. The industry was deregulated and the world kept turning.

So why is it a bad thing that Ford, GM and Chrysler file for bankruptcy? It gives the automakers a chance to reorganize, it provides each with protection from (and a fair amount of latitude to negotiate with) lenders and unions. It provides each an opportunity to slim down and emerge more competitive. Most important, it forces them to deliver a workable plan to a bankruptcy court to demonstrate that each has a viable way to emerge from bankruptcy.

The same logic applies to all of the financial institutions clamoring for money. We have a mechanism for dealing with the issue. It’s called the bankruptcy system and it should be employed now more than ever.

In 2005, Congress debated and passed the Bankruptcy Abuse Prevention and Consumer Protection Act to hold individual Americans more financially responsible. Now, three years later, Congress ignores the very same rules it passed to open up its taxpayer-funded checkbook so it can bail out the very same corporations that asked for this act because they contended that the average American was abusing the bankruptcy system.

The only two words I can think of to describe this scenario are ironic and despicable.

— Richard Murphy, Kent

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