The Nation -- Democratic presidential candidate Barack Obama, like
rival John McCain, has yet to take a stand one way of the other on
the proposal to have U.S. taxpayers bail out the worst players in
the U.S. financial system with a scheme to buy up $700 billion worth
of bad loans.
Obama calls McCain "the great deregulator" and warned that the
Republican would do to the health care system what had been done to
the banking.
McCain's campaign called Obama a "directionless driver" on the
economy.
Obama was for helping Wall Street and Main Street, which was better
than just helping Wall Street... but not much, when you consider
that Main Street rarely wins these wrestling matches. McCain was for
keeping "people in their homes and (safeguarding) the life savings
of all Americans by protecting our financial system and capital
markets," which is this week's variation on the "sound economy" in
"crisis" dichotomy of last week.
But neither candidate took a clear stand on the proposal that's
being placed on the table.
So what should the contenders -- especially Obama -- be saying?
How about borrowing a page from Vermont Senator Bernie Sanders, who
served as a member of the House banking committee before his
election to the Senate, where he is now a member of the budget
committee.
Sanders actually understands how the current crisis got started.
And the independent senator understands that what is being proposed
by the Washington and Wall Street mandarins who got us into this
mess as a fix is actually bad policy on steroids.
Here's what Sanders says -- and what Obama and the Democrats should
be saying:
For years, as a member of the House Banking Committee and now as a
member of the Senate Budget Committee, I have heard the Bush
Administration tell us how "robust" our economy was and how strong
the "fundamentals" were. That was until a few days ago. Now, we are
being told that if Congress does not act immediately and approve the
$700 billion Wall Street bailout proposal these "free marketers"
have just written up, there will be an unprecedented economic
meltdown in the United States and an unraveling of the global
economy.
This proposal as
presented is an unacceptable attempt to force middle income families
(and our children) to pick up the cost of fixing the horrendous
economic mess that is the product of the Bush Administration's
deregulatory fever and Wall Street's insatiable greed. If the
potential danger to our economy was not so dire, this blatant effort
to essentially transfer $700 billion up the income ladder to those
at the top would be laughable.
Let us be clear. If the economy is on the edge of collapse we need
to act. But rescuing the economy does not mean we have to just give
away $700 billion of taxpayer money to the banks. (In truth, it
could be much more than $700 billion. The bill only says the
government is limited to having $700 billion outstanding at any
time. By selling the mortgage backed assets it acquires -- even at
staggering losses -- the government will be able to buy even more
resulting is a virtually limitless financial exposure on the part of
taxpayers.) Any proposal must protect middle income and working
families from bearing the burden of this bailout.
I have proposed a three part plan to accomplish that goal which
includes a five-year, 10% surtax on the income of individuals above
$500,000 a year, and $1 million a year for couples; a requirement
that the price the government pays for any mortgage assets are
discounted appropriately so that government can recover the amount
it paid for them; and, finally, the government should receive equity
in the companies it bails out so that when the stock of these
companies rises after the bailout, taxpayers also have the
opportunity to share in the resulting windfall. Taken together,
these measures would provide the best guarantee that at the end of
five years, the government will have gotten back the money it put
out.
Second, in addition to protecting the average American from being
saddled with the cost, any serious proposal has to include reforms
so that we end the type of behavior that led to this crisis in the
first place. Much of this activity can be traced to specific
legislation that broke down regulatory safety walls in the financial
sector and allowed banks and others to engage in new types of risky
transactions that are at the heart of this crisis. That deregulation
needs to be repealed. Wall Street has shown it cannot be trusted to
police itself. We need to reinstate a strong regulatory system that
protects our economy.
Third, we need to address the needs of working families in this
country who are today facing very difficult times. If we can bail
out Wall Street, we need to respond with equal vigor to their
plight. That means, for example, creating millions of jobs through
major investments in rebuilding our crumbling infrastructure and
creating a new renewable energy system. We must also make certain
that the most vulnerable Americans don't freeze in the winter or die
because they lack access to primary health care.
Finally, we need to protect ourselves from being at the mercy of
giant companies that are "too big to fail," that is, companies who
are so large that their failure would cause systemic harm to the
economy. We need to assess which companies fall into this category
and insist they are broken up. Otherwise, the American taxpayer will
continue to be on the financial hook for the risky behavior, the
mismanagement, and even the illegal conduct of these companies'
executives.
These are the last days of the Bush Administration, the most
dishonest and incompetent in modern American history. It is
imperative that, at this important moment, Congress stand up for the
middle class and for fiscal integrity. The future of our country is
at stake.
