By, for and about the high school students of Clark County
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| Each month, guest columnists U.S. Senate Majority Leader Harry Reid (D-NV) and U.S. Sen. John Ensign answer questions on topics that matter to young Nevadans. Send your questions on government and politics to senators@classmag.com | |
| TOPIC: BAILOUT | |
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| Sen. Harry Reid (D-NV) grew up in the small, desert town of Searchlight, Nev. and graduated from Basic High School. At Basic, he joined the school’s boxing team and discovered an interest in politics that has led to his poisition as one of the most important lawmakers in America. For more info, visit reid.senate.gov. | Sen. John Ensign (R-NV) was raised in northern Nevada and moved to southern Nevada to graduate from Clark High School. In addition to bringing millions of extra dollars to Nevada schools through his Education High Growth Grant amendment, he has also worked as a veterinarian. For more info, visit ensign.senate.gov. |
| What exactly is a bailout? | |
| Reid: When talking about the financial stabilization legislation, you have to know a little about how money is borrowed and lent. Financial companies rely on the ability to borrow and lend money to keep it flowing through the system. As long as money is flowing, companies can continue to make their payroll and expand their businesses -- that’s how a good economy works.
Through a combination of factors -- notably greed and disdain for regulation -- these big companies did not have enough money to keep lending. This caused the system to slow down and that is why the U.S. government is lending these companies money. This is not something Congress likes to do or does often, and it’s important to understand that these are loans on which we will collect. The country’s best economists warned that without loaning money to companies that are important to market system, the economy would become more unstable and more people would lose their jobs and their retirement. |
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| Ensign: A bailout occurs when the government must step in and provide the finances for a business to remain viable. This occurred last year when it was feared that the financial sector would bring the entire economy down if the federal government did not provide them with billions of dollars to continue operations.
Congress is working on a so-called economic stimulus bill that will be determined by the time you read this. Democrats are supporting a spending bill that would cost $1.2 trillion. Most of the projects in their legislation will not help stimulate the economy. I hope that the final bill will aggressively address the housing crisis, which I believe is at the root of our economic downturn. It should also provide targeted tax relief that will help create jobs, grow our economy and eliminate wasteful spending |
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| Where is the money coming from? | |
| Reid: Taxes. Congress authorized that tax money be loaned to these companies so a bad situation doesn’t get worse. The money is a loan from the American taxpayers. All the companies and banks that receive the money have to pay it back with interest to the government so it can be used in the future for the services and programs that government provides its citizens. That is why Congress insisted on watching carefully what the companies do with this money and how they are planning to pay it back to the American people. | |
| Ensign: That is an excellent question. The money comes from you. The federal government is making many financial commitments but delays paying the bill for them by passing them on as debt for future taxpayers. I believe this is a terrible travesty. As leaders, we have a moral responsibility to pay our bills, not leave a burden for our children and future generations. At the rate government is spending money, there will be no choice but to raise taxes in the near future. Today’s students may have to one day pay close to 90 percent of their income in taxes. That makes economic growth and prosperity nearly impossible. Today’s leaders need to make responsible decisions about how money is spent so we don’t saddle you with unbearable debt. | |
| How is this affecting Nevada? | |
| Reid: We probably all know people who have lost jobs or are struggling to stay in their homes right now. Nevada is currently facing a number of economic problems that could be assisted by the economic recovery plan. Nevada’s unemployment rate recently shot up to 9.1 percent -- the highest in 25 years -- and our state continues to lead the country in home foreclosures by a large margin. | |
| Ensign: Nevadans are experiencing a terrifying economic reality. No state better exemplifies the housing collapse than Nevada. That is why it is so critical that we fix the housing market. I am working on a proposal that would allow homeowners to refinance their mortgages or purchase new homes at a 4.2 percent fixed-rate, 30-year mortgage. For most families, that would put an extra $400 in their pockets every month for the life of the mortgage. What could your family do with an extra $5,000 a year? | |
| Why not give the bailout money directly to the American people? | |
| Reid: I believe we can put money back into your pocket by shoring up our financial system so banks begin loaning money again, allowing people to get loans for school, cars, houses and other needs. Stabilizing our economy must happen through this and by getting people back to work. The economic recovery plan that will help the unemployed and others who are struggling is being crafted specifically with Nevada in mind. The economic recovery package is different than the financial stabilization legislation. This assistance will focus on four main areas of vital interest to Nevadans: creating jobs, helping people stay in their homes, relieving the tax burden and maintaining state services. All of these things will help stabilize the economy making it easier for you to get loans for your education or your first car. | |
| Ensign: I agree. That is why I support measures that direct money to your family rather than to government programs that will not stimulate the economy. To read more about my ideas, please visit my website or find me on Facebook. | |
| College Education | |
| Education and Personal Experiences | |
| BAILOUT | |
| Supporting Teenagers | |