Taxpayers as Hostages

CERTAINLY the Mideast-hostage drama has been the most exciting story of recent days - what with admirals and generals and experts on TV going over maps of Beirut to explore our military options. And dramatic pleas from hostages recorded by Lebanese terrorists in full color for international impact. Yet during last week, ending Saturday in the wee hours, Washington was dealing with another hostage crisis, this one more invisible. It's called the savings and loan bailout, and it makes the American taxpayer hostage to a 30-year scheme that will cost at least $300 billion - probably more.

The compromise agreed to between Congress and the White House in the eleventh hour (when else?) on the eve of summer recess is the biggest bailout since the Great Depression. It will affect millions of real estate owners and thrift depositers.

Yet it's not clear the issue has really been faced up to. It's been consistently played down in Washington, even as the severity of the problem - years of junk bond dealing, outrageous real estate loans, and outright fraud by a handful of S&Ls in and around then-House Speaker Jim Wright's Texas sphere of influence - loomed larger and larger.

The compromise, which will require $20 billion ``on budget'' this year, and $30 billion ``off budget'' next year (financed by bonds), may only be a short-term stopgap. Some 200 to 500 S&Ls will close. That's good. So is the fact that to survive, S&Ls will have to be bought and managed by banks.

But no one knows the real cost. The $300 billion estimate is very optimistic, as the Wall Street Journal notes. It assumes no inflation, no recession, and that S&L deposits will grow, though they are actually in decline.

Just think how much more productively those billions could be spent. The magnitude of the cost is equivalent to President Bush's vision for a manned trip to Mars.

What's most worrisome, however, is the way the bailout has been treated by all parties as a crisis to be managed rather than a serious wrong to be effaced.