"Treasury Secretary Henry Paulson initially proposed $700 billion under TARP, the Troubled Assets Relief Program," I continued. "But wait, Paulson then said no, it's not a good idea to spend the money on troubled assets -- better to spend the money on buying stock in financial institutions. So within weeks, the central premise of the bailout -- the need to purchase 'toxic' assets held by financial institutions -- was thrown out the window."
My friend and I were now drawing a crowd.
"Paulson told us," I said, "that lenders needed money in order to unlock the 'credit freeze.' But banks instead used the money to clean up their own balance sheets or to purchase other banks -- completely contrary to the stated purpose of providing them cash infusions. And now Obama wants to 'put people to work' on government infrastructure projects. He wants to 'modernize' school and federal buildings. He wants to invest in technologies to create 'green' jobs."
"How do you know it won't work?" he asked.
"Well, years into the Great Depression, FDR's secretary of the treasury, Henry Morgenthau, declared (quoted here verbatim): 'We have tried spending money. We are spending more than we have ever spent before and it does not work. … We have never made good on our promises. … I say after eight years of this Administration we have just as much unemployment as when we started … and an enormous debt to boot!'
"So this has been tried, and many economists believe that the spending, along with other dumb government actions, prolonged and possibly deepened the problems and certainly did not solve them."
"So what's the answer?" he asked.
"Well, back to my dad. Mind you, he does not read The Wall Street Journal or Investor's Business Daily or Forbes magazine. I recently asked him the same question.
"'It seems to me the government's just too damn big,' said my Depression-era/World War II-veteran father. 'I'd let people keep their own money. They'll figure it out. They always do.'"
"But," I repeated, "Obama certainly is likable."