The government bailout program has a lot of unintended consequences, nearly all of them bad. But, what about a consequence that congress may actually intend?
When you examine the actions of the United States Congress, you can have little doubt that they would like to control the most fundamental behavior of business. Congress forces businesses to spend money through OSHA, community reinvestment, and a myriad of other regulations (I intentionally don’t keep this stuff in my head.) So now they want to use the poorly conceived bailout (or stimulus) plan to exert their influence over business behavior. They justify this takeover by, as usual, claiming to protect the taxpayers’ money. (They seem to forget that they confiscated that money from the taxpayer in the first place.)
Congressmen want to stop the use of corporate jets; they want to dictate executive compensation; they criticize Bank of America for advertising during the Super Bowl; and they want Citi Corp to back out of a deal to finance part of the Citi Field ballpark for the New York Mets. They keep saying, “If you take government money, you must be accountable.”
Put the error of redistributing money from taxpayers to failed businesses aside. When did the 535 men and women, with little experience in business, suddenly gain the expertise to decide what amounts to a good or bad business decision.
Corporate jets help some businesses operate more efficiently. Some businesses simply pay people more than others. Does advertising in the Super Bowl bring in more money than it costs, as B of A contents? A lot of businesses seem to think that stadium sponsorship makes good business sense.
Lastly, Congress never seems to consider the unseen consequences. Some businesses and workers suffer when corporations don’t buy jets. Specific saving and spending does not happen when compensation gets cut. People in advertising businesses lose income when big advertisers cut back. Even city boondoggles like ballparks have to cut employees when sponsors back out.
Yes, businesses make mistakes, but those mistakes have limited impact. When Congress makes mistakes, everyone feels the result. The more control Congress gains over business the wider the impact of bad business decisions.