Word: bailouts
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These days, almost everyone else in the upper echelons of American life is cushioned from the consequences of failure. Congressmen bask in a 98% re- election rate, Donald Trump is rescued by a last-minute bank bailout, and CEOs almost never face executive outplacement after a few quarters of skimpy earnings. But there are no banked turns on the tenure track in baseball, where the typical dugout denizen lasts two years and a manager has been fired during every season since...
After a slow start, the Bush Administration's bailout has been moving quickly. The Resolution Trust Corp., which is responsible for liquidating and selling off insolvent thrifts, has closed or sold 96 since the beginning of April and expects to handle another 45 by the end of this month. But the RTC's work load keeps growing; the CBO estimated last week that as many as 1,700 thrifts in the U.S. may collapse, more than half the S&L industry. The RTC has only enough money to deal with another 120 institutions at best. After that, the cleanup will...
...some Democrats think they may be able to make political hay from the mess. Since four of the five Senators accused of being $ swayed by contributions from S&L owner Charles Keating are Democrats, that may not be too easy. Still, some Democrats believe the slow start of the bailout is a separate scandal for which the Bush Administration alone is responsible. "Unlike the first crisis, in this one there is not plenty of blame to go around," contends Congressman Charles Schumer of New York...
...cleanup bill mounts, political mudslinging is likely to increase. "The Government needs a sideshow to shift focus from the cost of dealing with the problem," says Paul Horvitz, a finance professor at the University of Houston. At this point, the biggest new scandal would be to push the increased bailout cost into the future by borrowing more money. Felix Rohatyn, the Manhattan investment banker and fiscal gadfly, proposed last week that the Government pay for the bailout with a 5% surcharge on federal income taxes, which could raise $25 billion to $35 billion a year. Borrowing the money instead...
...electorate will not go to the polls. Large numbers of American households resisted sending back their census forms, and this year's tax-evasion gap is expected to exceed $100 billion for the first time ever. Faced with the largest financial fiasco in U.S. history -- a savings and loan bailout that could cost up to half a trillion dollars -- American taxpayers have barely uttered a peep. "People don't feel any sense of ownership over the Federal Government," says Democratic pollster Geoffrey Garin. "It isn't them, and it isn't theirs...