Is the bailout really welfare?

I spent five years working with poverty law advocates and analysts, and it is with those eyes that I’m viewing the proposed $700B bailout of Wall Street. There’s an obvious point to be made here that maybe finally the bootstrappin’ free-marketers finally might develop some empathy for the deadbeat moms and learn that everyone is vulnerable and occasionally needs a helping hand.

But I also take note of liberal demands that banks and their executives should not profit from taxpayer largesse. This is understandable and morally defensible. But there’s a funny parallel between their claims and the argument that’s been advanced by conservatives for the myriad punitive clauses in welfare — dozens of rules to prevent benefit recipients from “defrauding” the American public. Advocates for the poor have rightly pointed out that these clauses provide negative incentives for people to work, and sometimes so rigidly curtail allowed activities that people can’t find their way out of poverty. As a pragmatic, not a moral, matter, I wonder if the same analysis applies to efforts to cap the banking industry’s forward-looking profits.

Seems to me like the argument being advanced for expensive corporate welfare opens up some new possible discussions around the much cheaper and more down-to-earth family welfare programs. Maybe both sides of that debate can have a little more empathy for each others’ positions now that the tables have turned somewhat.

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