We suspect that if Congress had asked, American taxpayers would have emphatically explained they don’t want to pay to bail out failing companies.
Nevertheless, Congress approved $700 billion in late 2008, ostensibly to stabilize the financial system by injecting tax money into banks and other financial institutions.
Most Americans, it seems likely, would have had even greater reservations about this massive redistribution of their wealth if they understood their hard-earned taxes were to be deposited not only in the vaults of American financial institutions, but, to a large extent, would have a far greater impact overseas, compared with how foreign governments’ bailouts affected the U.S.
The $700 billion TARP fund sent unspecified billions of dollars to big banks in France, Germany and other nations, according to a report based on calculations from a congressional watchdog.
“Most other countries, by contrast,” reports The Associated Press, “focused their efforts more narrowly on banks in their nations that usually lacked major U.S. operations.”
Simply put, U.S. taxpayers disproportionately subsidized faltering foreign banks, while foreign nations generally kept their subsidies within their borders. Once again, U.S. taxpayers were tapped as the world’s sugar daddy, while our friends overseas concentrated on taking care of their own.
The U.S. sent money to about 700 banks, while all other governments combined aided fewer than 50. In just one example, of the 87 financial entities benefiting from U.S. aid to insurance giant American International Group Inc., 43 were foreign, located in France, Germany, Canada, Britain and Switzerland. The congressional report said if the U.S. had known more about which foreign banks would benefit, the government might have asked those countries to share costs.
“There were no data about where this money was going,” congressional oversight panel chair Elizabeth Warren said. “The American people have a right to know where the money went.”
We agree. However, we also believe most Americans would just as soon keep their money as turn it over to the government, let alone distribute it around the world. It’s prudent to know where money is headed before cutting the checks. But before that, the government should consider whether taxpayers like the idea at all.