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A Project of The Annenberg Public Policy Center

‘Bailout’ Baloney

Serving up a loaded word to spin the public.


This campaign season, “bailout” is a dirty — and often misused — word.

It’s no longer being used just in reference to Wall Street banks and the rescue of the financial industry. Candidates, corporations and special interest groups increasingly use “bailout” even when no government financial assistance is being proposed:

  • Congressional candidates across the country are claiming their opponents support a "bailout" for BP, when in truth nobody is proposing a government handout to the oil-spill culprit.
  • FedEx has been misusing "bailout" for more than a year in a multimillion-dollar campaign to prejudice the public against a proposal that would change labor laws.
  • Environmental groups used "bailout" to rally opposition to a Clean Air Act amendment that would have barred the EPA from regulating greenhouse-gas emissions.

Those who abuse the word "bailout" aren’t appealing to logic, or trying to describe what they oppose accurately. They are seeking to trigger a gut response in an audience inclined to recoil instinctively at the word, and hoping nobody stops to think or ask questions.


The word “bailout” got a bad name when President Bush and a Democratic Congress enacted a $700 billion financial rescue bill in October 2008 that was designed to prevent the collapse of major financial institutions. The idea of helping the very institutions that caused the financial collapse was, to quote President Barack Obama, “as popular as a root canal.” Gallup found that 59 percent of Americans opposed the Troubled Asset Relief Program, and the public’s confidence in banks dropped to a record low of 22 percent. The term “Wall Street Bailout” has become an epithet used against anyone who voted for it.

Even that term isn’t entirely accurate; some of the firms that received aid are located far from New York’s financial district, and the larger purpose was to keep credit flowing to businesses across the country. But love it or hate it, the rescue of the financial institutions was indeed a bailout. The banks were failing and needed financial assistance to stay in business. TARP fits the Oxford English Dictionary definition of bailout to a T:

Bailout, n. A (means of) release or rescue from difficulty or crisis; spec. an act of giving financial assistance to a failing business, etc.; money given as such assistance.

Since the $700 billion financial rescue package, however, “bailout” has been misapplied to other bills and amendments. As of July 1, the word has been used more than 100 times in TV ads this year, based on a text search of political ads compiled by Campaign Media Analysis Group. And the use of it is spreading. But applying the word “bailout” to a bill doesn’t make it so, just as attaching the suffix “-gate” to a term doesn’t make it a scandal. Unlike TARP, most of the bills now being called "bailouts" don’t propose to give money to rescue failing businesses. Some don’t give money to businesses at all.

Oil Spill Spreads Misuse of ‘Bailout’

The oil spill in the Gulf of Mexico provided a gusher of new ways to misuse "bailout," as candidates have roundly misrepresented what the oil spill means to taxpayers.

As we’ve written before, the Oil Pollution Act of 1990 mandates that the cleanup is paid for entirely by BP, whatever it ends up costing. Economic damages are capped at $75 million, but BP has said it will ignore that and pay any legitimate claim. Indeed, the company already agreed to create a $20 billion fund to pay claims of economic damages. Nevertheless, we have seen a flurry of slick ads and petitions (before and after the fund was created) that claim or imply taxpayers will foot the bill and describe this as a “bailout” for BP.

The fact is the federal government is not proposing to give BP any financial help. But as legislative proposals have piled up, so has the misinformation.

The "bailout" spin began when Democratic Sen. Robert Menendez of New Jersey introduced the Big Oil Bailout Prevention Liability Act, extending the cap on economic damages from $75 million to $10 billion and making it retroactive to the Gulf spill. (This was before the $20 billion fund was created.) Those who opposed the bill were tagged for supporting a “Big Oil bailout.” MoveOn.Org circulated a petition to support the Menendez bill, using the misleading headline “No Bailouts for Big Oil.” We wrote earlier about how Robin Carnahan, a Democratic candidate for Senate in Missouri, used her strong early support for the bill to falsely attack her Republican opponent, Rep. Roy Blunt, for refusing to make BP pay for the cleanup and conspiring to stick Missourians with a $268 million cleanup bill.

Other politicians have been attacked even though they support raising the cap on economic damages substantially. Democratic Rep. Charlie Melancon of Louisiana posted an online petition critical of Republican Sen. David Vitter’s bill, the Oil Spill Response and Assistance Act. Melancon, who is challenging Vitter, referred in his petition to "David Vitter’s oil spill bailout bill" and claimed that "those who caused this mess should be 100% responsible for the cost of the cleanup and recovery.” But he had it wrong on both counts. BP is already 100 percent responsible for the cleanup, and Vitter’s bill is not a bailout. Rather, it would raise the cap on the cost of the recovery to $150 million or four quarters of the company’s profits, whichever is larger. Democratic Rep. Mary Jo Kilroy of Ohio and Lee Fisher, the Democratic Senate nominee in Ohio, posted similar petitions online that warn of looming taxpayer-funded cleanups.

Most Creative Misuse of ‘Big Oil Bailout’

Advocacy groups have gotten into the act. One of them uses images of the Gulf spill and misuses the term “Big Oil Bailout” to advance an agenda that has no real connection to the spill.

[TET ]
Clean Energy Works TV Ad: "Sliming"

Announcer: Oil, sliming more miles of the Gulf Coast every day, and in Washington, Big Oil lobbyists were looking to slime our Senator too. They tried to pressure Harry Reid to vote for a Big Oil bailout worth $47 billion. Senator Reid had two words for Big Oil: "No way." He voted to hold oil companies accountable so they can’t pollute and get away with it. Senator Reid, keep standing up to Big Oil and fighting for America’s clean energy future.


In a series of TV ads, an environmental coalition group called Clean Energy Works thanked senators — such as Senate Majority Leader Harry Reid of Nevada — for voting against an amendment to the Clean Air Act offered by Republican Sen. Lisa Murkowski of Alaska. The amendment, which was defeated June 10, would have stripped the Environmental Protection Agency of the power to regulate carbon emissions. The ad shows images of spilled oil spoiling Gulf beaches, as the announcer thanks Reid for standing up to Big Oil lobbyists: “They tried to pressure Harry Reid to vote for a big oil bailout worth $47 billion.” But Murkowski — who introduced the amendment Sept. 23, 2009, long before the Gulf spill — wasn’t proposing to give any federal money to oil companies, let alone $47 billion.

So what would Murkowski’s resolution actually do? It would have blocked the EPA from regulating greenhouse-gas emissions – which primarily come from the burning of fossil fuels. Unregulated emissions could mean more fossil fuel use, leading to more oil consumption and more money in oil companies’ pockets, but that doesn’t constitute a bailout. Any money exchanged would be between private citizens and oil companies, not from the government providing emergency funds. It’s true that Murkowski proposed to spare the industry from new regulations that could prove quite expensive. But calling that a "bailout" is just an inaccurate use of an emotionally laden word.

A Lot of Money, But Not a Bailout

One of the latest examples comes in an attack ad against Reid, who faces a tough reelection campaign this year. The ad, which first aired June 14, refers to the $787 billion economic recovery bill that Reid helped draft as a “bailout.”

[TET ]
American Crossroads’ TV Ad: "Paying Off"

Announcer: With Nevada in economic free fall. Harry Reid brags about his taxpayer funded $787 billion dollar bailout saying, "There’s no question our hard work is paying off." Paying off? Paying off for whom? More than 180,000 Nevadans are out of work. Nevada home values have plummeted. Record foreclosures. Harry Reid’s work is paying off alright. Paying off for his friends in Washington, but leaving Nevada with what?

Yes, the bill had a big price tag — indeed, it has now grown to $862 billion. But it was not a bailout. The money wasn’t handed out to support failing companies. Rather, it included $275 billion in new spending to fix highways, upgrade the energy grid, expand the use of renewable energy and other construction projects, as well as $224 billion for entitlements such as extending unemployment benefits and increasing food stamp payments. It also provided nearly $300 billion in tax relief – mostly through tax credits of up to $400 for individuals and $800 for families.

What Can the Word ‘Bailout’ Do For You?

These are only the latest examples of the use and abuse of the word “bailout.” As we have written, FedEx misused the word in a multimillion-dollar ad campaign claiming that the FAA reauthorization bill provides a "bailout" for rival UPS. The bill would change labor rules in ways that would affect FedEx workers, not provide any federal aid to UPS — which is not a failing business and not in need of a bailout. We wrote about it in July 2009, but Congress hasn’t finished work on the bill and FedEx is still pushing its case on the website www.brownbailout.com.

And then there were misleading claims that the "Wall Street Reform and Consumer Protection Act" provided another massive bailout to big banks. As we wrote in February, a third-party group called Committee for Truth in Politics ran a TV ad titled the "Big Bank Bailout" that claimed the financial regulation bill would provide a $4 trillion "bailout" to banks. As we said at the time, the Fed already had the authority to provide unlimited loans to banks in "unusual and exigent circumstances" and this bill, as written at the time, would have capped the loans at $4 trillion.

Republican leaders also criticized the same bill for proposing to create a multibillion-dollar fund that would have been used to liquidate a bank on the verge of collapse. Senate Minority Leader Mitch McConnell, among others, called this fund a "bailout." But that was misleading. The money — $50 billion in the Senate bill and $150 billion in the House bill — would not have come from taxpayers, but rather from banks and financial institutions. And it wouldn’t have been used to  "rescue" a failing bank; it would have been used to liquidate it. Nevertheless, the campaign against the fund worked: The most recent available version of the financial regulation bill, which is still making its way through Congress, doesn’t include it.

‘Frame the Issue, Claim the Issue’

"Bailout" joins a growing list of words and phrases that are misused by politicians, media consultants and others looking to frame the debate in a way that is favorable to their cause. As our own Brooks Jackson and Kathleen Hall Jamieson write in "un-Spun: Finding Facts in a World of Disinformation," the strategy is this: "Frame the issue, claim the issue."

For example, the term "death tax" isn’t a tax on death, but a tax on inherited wealth  But people think a "death tax" is unfair, as GOP consultant Frank Luntz wrote in "Words That Work: It’s Not What You Say, It’s What People Hear. It’s worked. The estate tax was cut during George W. Bush’s presidency. Democrats also had success for a time with applying the term "assault weapons ban" to legislation that didn’t really ban military assault rifles — fully automatic weapons like those have been illegal to own without a hard-to-obtain federal license since the days of Machine Gun Kelly.

More recently, we’ve seen Republicans use "death panels" to describe requiring Medicare to pay for end-of-life consultations, and Democrats continue to get mileage out of "privatization" when referring to a Republican proposal to allow individuals to voluntarily invest a portion of their Social Security contributions in widely diversified stock funds.  All these terms have been used to short-circuit reasoned, thoughtful debate by triggering an emotional response.

Our advice: Don’t let somebody else’s choice of words do your thinking for you.

by Eugene Kiely, with Michael Morse


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