Government Funding

The top 3 producers of american cars are asking for special funding from the government to help them survive the next couple of months. They have asked for 15 billion dollars to help them stay afloat. With the recent downturn their sales and profits have gone far into the negatives. Congress is debating over how much to help them, and stipulations that will be placed on the money.
The government must produce this money somehow. They have the options of borrowing it from investors, printing it, or taking from the people through taxes. Because this is unplanned governments expenditures, most likely they will borrow it from investors because they have not yet received their tax revenues. Also, the government hasn’t had time to adjust taxes to meet the needs of this new expenditure.
Usually, when the government borrows money from the people it reduces overall investment. This leaves the economy with less money invested into assets for work. With the recent bail out the government is planning on investing it into companies. This is a very different trend compared to most of american history. By actually investing the money into businesses the the investment section of the economy doesn’t get harmed as much. Investment just becomes partially government controlled.
To borrow the 15 billion dollars from the general public the government must give some incentive to the public. This incentive to invest in the bonds comes in the form of interest payed on the money borrowed. The money cannot be simply printed or else inflation would be dramatic and this would only cause greater problems in society.