Today’s New York Times has a maddening article about what banks are doing with the $350 billion initial installment of the bailout money. The stated purpose of the bailout was to provide the banks with capital so that they could lend money to businesses and consumers in order to break through the credit freeze that was said to be gripping our economy. The lack of transparency in the disbursement of the bailout money, itself worthy of a national scandal, means that we don’t know where all the money has gone and what’s been done with it.

But according to the Times, “in conversations behind closed doors with investment analysts, some bankers have been candid about their intentions.” And it seems that lending money is well down on bankers’ list of priorities for how to spend their new-found windfall: “an overwhelming majority saw the bailout program as a no-strings-attached windfall that could be used to pay down debt, acquire other businesses or invest for the future” as well as a means to comfortably “ride out the recession.”

The US economy is in a recession and has been, according to the latest numbers, since the end of 2007. In such a climate, it makes sense that banks would be reluctant to lend money. The worse the economy is doing, the less safe it is to make loans to businesses. In other words, the credit freeze that has received so much attention is being a bit over-stated – it’s not happening in a vacuum. Instead, it’s a function, to some degree of the fact that the economy is struggling. But whether the banks are acting in an economically rational way, the way they are using the “bailout” money undermines almost entirely the rationale for the bailout in the first place. To take it a step further, the very fact that the banks are acting rationally by sitting on bailout money, or using it to improve their businesses in the long run, demonstrates that it was simply false that the bailout was necessary to avert an immediate crisis.

That the government has provided the staggering sum of $350 billion to the banking sector, with another $350 presumably on the way is extraordinary enough. But what makes it more infuriating to contemplate is the intense political battle and national hand-wringing over the bailout of the Big Three automakers. To be clear, the Big Three have been making largely inferior products for a long time. In the process, they have used their political clout for decades to shield themselves from the full effects of their weakened ability to compete in the marketplace. And, as an added bonus, they’ve increasingly banged out products that are only worsening the climate crisis, while obstructing the development of cars that could alleviate that crisis. In other words, there’s a lot that is wrong with Detroit, especially the incompetence of their executive leadership.

But those problems are not, ultimately, the reason that it was such a battle for the automakers to receive a $15 billion loan – chump change in the current environment. The main obstacle to Detroit receiving bailout money was that the Republican Party, aided and abetted by typically shoddy reporting, insisted that it was the unions that were killing Detroit. Repeatedly asserting that union autoworkers were making $70 an hour – a simple lie – opponents of the automaker bailout argued that it was well-paid American auto-workers that were making it impossible for Detroit to be competitive. It’s hard to over-state how perverse these arguments were (and are) in light of the massive sums of money being sent to the banks with no promise that they will use that money in America’s national interests. Current union workers make roughly $57,000 a year. Newly hired workers often make a little more than half that. And according to the most credible analysis, the difference in labor costs between Japanese-made and American made cars adds somewhere between $270 and $800 to the price of a new American car. In other words, the somewhat higher labor costs of unionized plants is simply not the reason that consumers prefer Toyotas to GMs. (Toyota, of course, is itself being battered by the current crisis). The government has been funneling hundreds of billions of dollars to the banking sector to do whatever they wanted with the money – a big thank you for having engaged in years of reckless business practices that have brought our economy to its knees. And yet, we had a straight-faced national conversation about whether a fifteen billion dollar loan to an industry employing millions of blue collar workers would be an unfair “reward” for bad behavior. (and, needless to say, in all the discussion of how American auto workers make so much more than their counterparts in Japanese owned plants, there was nary a peep about the enormous differences in compensation for American auto executives compared to Japanese auto executives).

Whether intended or not, this is, at bottom, war by other means against the less well-off in America. The tap never closes for the wealthy and the (non-unionized) institutions most closely associated with the wealthy. But the pipes suddenly freeze when it comes to providing aid to the lower orders in American society.

This is worth keeping in mind as we gird for the coming fight over health care reform. A new analysis by the Commonwealth Fund shows that a plan for universal health care, proposed by Congressman Pete Stark, would cover more people at less cost than any rival plan. In fact, the Stark plan – close to a plan for universal, government-paid health insurance – would save the country tens of billions of dollars a year in health care costs. But the Stark plan is almost certainly not politically viable because, as Matthew Yglesias puts it, “it’s too left-wing.” Commenting on this fact, Yglesias writes:

“But what’s incredibly frustrating is that a lot of people who claim to want to change public policy to expand health care coverage and better control health care costs will nonetheless fail to embrace Stark’s plan or anything similar for no real reason other than ideological posturing. It just can’t be the case, as a matter of centrist dogma, that the best solution is actually the most left-wing solution. It’s a far more ideological stance than anything you’ll ever hear from Pete Stark or from me. But the people hewing to it will insist on being called pragmatists.”

It’s a depressing fact that, in America, our default mode is to accept that the well-to-do are entitled to whatever they can get their hands on, while the less well off should be grateful for whatever is given to them. The differences in the nearly obstacle-free road to the massive financial bailout and the obstacle-laden path in the way of emergency loans to Detroit is a telling proxy for the larger class realities in America. We will hear lots of hand-wringing about how expensive it will be to extend health coverage to uninsured Americans. But in light of the bankers’ bailout (and just five years after Congress passed an enormous expansion of Medicare that was largely a give-away to large health industry corporations), it will be worth questioning whether concerns about costs or “principled” refusal to reward bad behavior are the real reasons why, yet again, we must tell the less well-off that when times are tough, they just need to suck it up.

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