With the recent collapse of the United States economy, it is unsurprising that some companies are going to begin to fall into bankruptcy. Of course, while more and more companies are failing, it leaves many wondering whether or not the government should step in and assist these failing companies. Although it is important to the economy that the federal government not allow these companies to bring the entire economy into shambles, there is only so much that the federal government should be doing. In my opinion, the federal government is wasting taxpayers’ money by bailing out most of these companies, and only hurting the economy even further.

According to a video on CBSNews.com the Government plans on spending over $700 Million on bailouts of various companies, including both automotive companies out of Detroit, banks, and more. The average cost of this bailout would equal out to about $2000 per person, but it is supposed to help the general public in the long run. The bailout, it should help reduce economic chaos, as well as allow for long term stabilization of the economy. This proposal does of course have taxpayers enraged, knowing that their hard earned dollars are going to companies who handle multimillion dollar transactions on a daily basis. Many Americans feel that the taxpayers should not have to bailout companies that have been continuing to fail and to lose millions of dollars over the years. An example of one of these companies is American International Group, or AIG. I believe that although parts of the bailout are necessary, it is important that the government does not bailout every company that asks for it, and waste taxpayers’ money. The government should really only bailout companies that are guaranteed to fail without assistance, and if they were to fail it would cause the entire economy to collapse even further. In return for the assistance, companies should be closely monitored to make sure that they are not wastefully spending, like AIG is giving those multimillion dollar bonuses to their failing employees using our money. Although those bonuses were under contract, it is still important that the government closely monitors spending of the assisted companies, to make sure they are using the funds wisely. I think that once the company is starting to succeed that it should pay back the government for its assistance, and that money should therefore go to a tax return or a stimulus bill back to the taxpayers, which is where the money came from to begin with.

Many believe that if the bailout continues to happen, it will help companies avoid having to lay off workers, therefore decreasing unemployment. Although this sounds like a great benefit of the bailout, no one can be certain that that is where the money will go. The rescue plan may also lead to an increase of credit availability, which should help allow consumers to make major purchases, such as homes, vehicles, and more. Despite this, it will most likely only be available to people with previously impeccable credit, which for the majority of the working class and middle class Americans, is not the case.

The American Automotive industries make up a huge amount of the United States economy. The automotive industry in American employs over 200,000 American citizens, which is a huge portion of our economy and labor force. On top of these 200,000 workers, there are also over two million American workers, who have jobs that relate to the automotive industry, whether their job is to be a mechanic, or to work in or own a company that sells replacement parts for American vehicles. If the automotive industries were to fail, there would be billions of dollars in lost tax revenue that the government needs to maintain their current spending levels.

Therefore, I feel that the companies that really deserve the bailout are mainly just the Detroit automotive companies that have chances of succeeding in the long run, plus any financial banks that would cause the economy to fall into an even worse state than we currently are in. Although it is not important that all the automotive companies in Detroit necessarily survive, I think that they do deserve some of the bailout because the economy will fail completely without them. It is important that the automotive companies start to develop new technologies, to help them compete with foreign automotive makers such as Toyota and Honda. The American automotive companies are still producing cars that are behind what Japanese and other foreign automakers are producing, which is part of the reason why they are failing. General Motors has too many branches of vehicles in my opinion, and they could easily cut down on a lot of wasteful spending and cut their losses by a lot of they got rid of some of their less successful brands. This would be similar to when General Motors stopped selling Oldsmobile’s back in the early 2000s. Recently, General Motors has announced that Pontiac will no longer be in production, and Chrysler has filed for Bankruptcy.

Some of the many reasons that the bailout plan is indeed necessary for the economy to turn around is that without it, the lending system will continue to fail. It is without a doubt that without the lending system recovered, that economy cannot function normally. The Government is currently working on fixing this problem, by averting more bank failures. If major banks fail, it will cause major chaos, and cost the people and the Government more money in the long run.

It is also vital that the government bailout because many of the states are in serious debt and this cannot happen. The states have an obligation to support their educational systems and public safety systems, as well as a large amount of other programs. If the states did not receive some help, they would have to drastically cut spending, cut thousands of jobs, which would just make things even worse.

For the economy to turn around, it is also important that the Federal Deposit Insurance Corporation or the FDIC permanently increase the amount of money that is insured in savings accounts. Recently the amount has been temporarily increased from $100,000 to $250,000, but it is important that that level stays at $250,000 or above. The previous FDIC Insurance level of $100,000 is simply outdated, with people making more and more money due to inflation, many wealthy people have to spread out their money into several different banks in order to make sure they are covered. If the FDIC increased the amount of money that they insure in the banks, people would be comfortable depositing money, which would therefore allow for more money to be available as loanable funds. With more funds available for loans, spending increases which helps stimulates the economy. It would also allow the general public to feel safe knowing that their lifetime savings and Individual Retirement Accounts, or IRA’s are safe and insured. With this new practice in place, I believe it could help prevent a potential “run on the banks” similar to what happened in the United States in 1929.

More benefits of the bailout plan include that the decreasing oil prices and slow stability coming from the United States financial system are good signs that the economy may be on the right path. The bailout plan will also help reinstate confidence in the economy, allowing for further spending and more loanable funds available. With the investment in the bailout plan now, it should help save us money in the long run and avoid the economic crisis from continuing on for longer than it should have to. Although it will be costly in the beginning, many economic experts and macroeconomists feel it is important for the livelihood of our economy and our country.

The stock market has continued to be unstable, and with this comes many negative effects. Many people have lost confidence in the market, and are very weary of investing. They have lost large amounts of money into their 401K and retire accounts, and are unsure what is to come next. The stock market has continued to fluctuate, but for the most part is on a trend going steadily downhill.

Despite the fact that many oppose the economic bailout, I feel that without the bailout we would only make things worse. If we do not bailout these companies and try to stabilize the economy, what will we do? After all, it is better to do something, than to do nothing at all. Doing nothing in these types of economic conditions will only make things worse, and allow for the recession to turn into a depression, and to last even longer. It is important that the government steps in to help turn the economy around.

In conclusion, I feel that the government needs to limit how much of the taxpayers’ money they are spending on bailouts and stimulus’, and focus more on turning this economy around and stop taking money out of the general public’s pocket. In order for our economy to turn around, it is vital that American consumers regain confidence in their economy, and it is also important that inflation slows down. It is expected that the economy should be on the correct path within a year or two, but until that happens the economy in America is going to be hard-hitting on the general public.