Will public's distaste for a 'bailout' fade?
If Monday's stock market crash seemed like a signal for Congress to do something, many Americans still cringe at the idea of government bailouts.
No wonder Americans aren't happy about the ideas being considered to resolve the deepening financial crisis. The task is to choose among bad options – and to do so in a hurry.Skip to next paragraph
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But amid all the debate about whether "Main Street" should bail out "Wall Street," the reality has also been sinking in for many that those two streets aren't that far apart.
Inaction in a financial crisis, moreover, carries its own price tag – a cost that economists generally say is much higher than that of a bailout.
That's one way to look at what happened Monday, when US stock shares lost more than $1 trillion in market value after a House "no" vote on a financial rescue bill – an amount greater than the rescue package itself.
But if that seemed like a signal from markets for Congress to "do something, anything," many Americans still cringe instinctively at the idea of government bailouts and rushed legislation.
"Who does this benefit? Who's getting bailed out? The higher-ups of these companies," says Kevin McGrath, a Boston musician, voicing a concern shared by millions. "But if we don't do it, the middle class aren't going to have retirement savings."
Many economists don't like the bailout plan, as proposed by the Treasury Department and revised by Congress last weekend, any better than ordinary Americans do. But they generally see stark consequences if there's an ongoing collapse in credit markets – the flow of loans for everything from small businesses to people who want to buy cars or expand a credit line.
All that is based on what's already happened. With a deeper credit crunch, challenges on Main Street could grow still larger.
It's a concern shared by small businesses around the country.
"No one, least of all small-business owners, is happy that this bailout is necessary," the National Federation of Independent Business said in a statement Monday before the House vote. "They did not create this mess.... But they understand that their ability to access credit to grow their business, send their kids to college, and save for retirement depends upon stability in financial markets."
Those points echoed the message of President Bush last week in a rare prime-time address to the nation.
Yet millions of Americans don't buy this line of reasoning.
Anger, moral principle, and distrust of policymakers or bankers create considerable opposition to the notion that banks should get special help now.
Pat Craig, a Boston software consultant, says the $700 billion plan for the government to purchase troubled debts "was just too fast. It just wasn't the right bill.... People don't want to pay off the rich guys with hedge funds."
But beneath all the frustration, and even rage, many also call for pragmatism.