Word: bailouts
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Last week President Bush came forward with a long-awaited bailout plan in which he sought to spread around the unhappiness in an evenhanded way. Said Bush: "Nothing is without pain when you come to solve a problem of this magnitude." His program will require taxpayers and S & Ls to share the burden of a rescue that will cost an estimated $126 billion during the next decade. The taxpayer portion would amount to about $60 billion, which would be contained in the federal budget over the next ten years. The Government would borrow $50 billion by issuing 30-year bonds...
...Government is obliged to spend $40 billion to cover bailout cases to which federal regulators are already committed, including 205 savings and loans that the Government closed or sold last year. The $50 billion bond issue would be spent to liquidate or auction off the remaining 300 or more insolvent savings and loans. Those failing thrifts will be isolated from the rest of the industry by bringing them under a new agency called the Resolution Trust Corp., which will oversee their cleanup...
...widespread early complaint was that Administration officials, notably Budget Director Richard Darman, were using sleight of hand to downplay the bailout's true cost. Darman originally seemed to say that the cost to taxpayers would total about $40 billion in the first decade, but that number in fact described only how much the plan would aggravate budget deficits. The actual spending from general revenues would be closer to $60 billion. But purely from an accounting standpoint, its impact will be offset by $20 billion in increased insurance-premium fees to be collected from the banking industry -- even though the funds...
...socialist agenda is disarmingly up front (at Cabinet meetings he calls his Ministers "comrades"), his tactics street-fighter tough. When the U.S. Government, upset at Perkins' antinuclear policies, turns up the economic pressure, he thumbs his nose by going to the Soviet Union for a financial bailout. Gleefully making the announcement at a press conference, he even supplies the tabloid writers with their next morning's headline: PERKINS SAVED BY KREMLIN GOLD...
...chair. Reinforcing the government's shift to the right is the appointment of Likud's Moshe Arens, the hawkish former Ambassador to Washington, to replace Labor leader Shimon Peres as Foreign Minister in Shamir's 26-member Cabinet. Peres, under strong pressure from his party to ensure a government bailout of the troubled Histadrut labor federation and the kibbutz movement, the twin pillars of Labor support, opted instead for the finance portfolio. Peres insists he will continue to speak out on foreign policy issues as leader of the Labor Party. But it will be Shamir and Arens who finally give...