President-Elect Barack Obama announced a plan to bail out the federal government Tuesday morning. He appears to have broad bipartisan congressional support.
The federal government has committed trillions of dollars to assisting banks, car companies, other businesses, states, cities, and other entities. With all that going on, federal finances started looking a little dodgy. The new bailout package will help with the problem.
Due to its unique nature, this bailout package will have its own special properties. $1 trillion will be added to the 2009 budget, borrowed as a no-interest loan from the 2010 budget. This in turn will be financed with a loan from the 2011 budget in cycle that will be repeated until the economy recovers. Should additional funds be necessary in later years, the amount borrowed may be increased. Larry Summers, part of the Obama economic team, stressed that this would be limited to no more than $10 trillion in any particular year.
Summers, an economist by training, explained that this proposal follows well-established economic and mathematical principles: "It's recursive, so you don't have to worry. We also call this nesting. It's just like what birds do, so it's safe and reliable."
Obama named Bernie Madoff to run the latest bailout, expressing confidence that "Bernie knows how to make money appear out of nowhere, and we need all that we can get in Washington."