Last Fall, Congress approved a $700 Billion dollar Bailout of the financial system. This month, Congress approved a $790 Billion dollar Stimulus Package to fix the economy.

Last week, President Obama unveiled a $70 Billion program to fix the foreclosure mess. Amid the applause is the nagging question: How will we pay for all this? The answers to each are different and complex and each requires more than a little bit of faith.

A Senator once commented: “a billion here, a billion there…pretty soon you’re talking about real money.” We’re now talking about real money.

The Bailout monies are actually loan guaranties and new loans designed to enable our financial markets to stay in business and make the financial advances to homeowners and businesses needed to keep our economy working.

These should be repaid over time by the borrowers just like any other loan. In some cases, this involves the government actually taking over banks that were failing because of troubled loans. This gives the government some authority to modify the repayment of those loans - not forgive them, but make them affordable.  But, other than enabling banks and industries to survive, for the most part it was left to the banks themselves to voluntarily modify loans.  That has not happened except in a few limited cases. President Obama appears to be attaching strings to any further bailout monies which will require action in exchange for government support.

The Stimulus monies are not loans. These are monies which the government will spend to create new jobs, promote education, for public works projects and for public health and safety - as well as monies the govenment will give back to people through tax credits.

The President’s real estate recovery plan uses stimulus monies.  In theory, the combination will stimulate growth in the economy by restoring consumer confidence leading to more consumer demand for goods and services that will trigger more manufacturing and more jobs, that will result in more taxpayers to payoff the debt. And “debt” it will be.

As part of the Stimulus Package, Congress approved increasing the national debt to cover the Stimulus cost. This means borrowing the money. From who and under what payback terms remains to be seen. Our government has few choices when it comes to obtaining money each of which has a pro and a con.

We can get it through taxes on a pay-as-you-go basis. But this takes money out of the economy and actually hurts businesses.

We can get it through borrowing from others by selling bonds. But this raises the national debt and burdens future generations for the errors of today.

Or we can print more money. But the devaluation caused by more dollars actually would cause inflation raising the prices - but not the value - of everything.

Most believe that the solution will be a combination of all three but that the true burden of this debt will be paid by generations of taxpayers yet to come. Perhaps that is true, yet without strong and bold action to save our economy such as President Obama has brought us, there was a real chance that this recession could deepen into a depression from which our nation might not recover.

Now it’s up to all of us to pull together and in a spirit of optimism restore our nation’s economy and “can do” image so that the beacon of light that is America continues to shine bright in a world struggling with darkness.

If you have questions about how to cope with economic issues or any legal questions,

contact  us at BPE Law Group: Steve’s E-Mail www.bpelaw.com