Taxpayer Bailouts and a Real Ownership Society

Nathan Newman points out a very important (if little noticed) development today: a federal court approved a settlement between the government and U.S. Airways over the airline's bankrupt pension plan. In having taxpayers pick up the tab for the pension shortfall, the court gave the federal government a direct ownership stake in the airline.

As Nathan points out, this might not amount to much cash for the government in the end, but the principle is a very important one. For too long, our government has been bailing out industry after industry (think airlines, insurance, S&L, stadium deals, etc.) with billions of dollars of taxpayer cash. In exchange, however, taxpayers have gotten no return on their investment - we've thrown these industries money and asked for no ownership stake in the companies we are bailing out. That's corporate welfare in its most pure form.

There is a good case to be made that some of these industries that we are bailing out are essential to the American economy. That's all well and good - but it doesn't negate the fact that politicians need to start treating taxpayer money as if it is as valuable as any other kind of money. No private investor or bank would agree to take their cash and just give it to companies because they felt bad for them. They would give it to companies and demand something in return. That's what our government needs to be doing. It's the same principle behind legislation, for instance, that would require drug companies to sell medicines developed at taxpayer expense at a "fair and reasonable" price. Taxpayers deserve returns on their investment. And to argue the opposite - that we should just hand over taxpayer cash to industries and ask nothing in return - is just plain silly.

If we are really interested in creating an "ownership society" as President Bush says, then tying corporate welfare to ownership stakes is a great way to do that. Creating partial public ownership in industries that are relying heavily on public subsidies is not only the fair way to treat hard earned taxpayer money, but it is a way to start injecting some public control over corporations that too often abuse citizens with no restrictions. And with America's private pension system severely underfunded, this issue of bailouts and ownership is only going to get bigger in the coming months and years.

COMMENTS: Go to Sirota's Working Assets site to comment on this entry