Billions for Bailouts! Who Pays?
The current financial crisis facing our country has been caused by the extreme right-wing economic policies pursued by the Bush administration. These policies, which include huge tax breaks for the rich, unfettered free trade and the wholesale deregulation of commerce, have resulted in a massive redistribution of wealth from the middle class to the very wealthy.
The middle class has really been under assault. Since President Bush has been in office, nearly 6 million Americans have slipped into poverty, median family income for working Americans has declined by more than $2,000, more than 7 million Americans have lost their health insurance, over 4 million have lost their pensions, foreclosures are at an all time high, total consumer debt has more than doubled, and we have a national debt of over $9.7 trillion dollars.
While the middle class collapses, the richest people in this country have made out like bandits and have not had it so good since the 1920s. The top 0.1 percent now earn more money than the bottom 50 percent of Americans, and the top 1 percent own more wealth than the bottom 90 percent. The wealthiest 400 people in our country saw their wealth increase by $670 billion while Bush has been president. In the midst of all of this, Bush lowered taxes on the very rich so that they are paying lower income tax rates than teachers, police officers or nurses.
Now, having mismanaged the economy for eight years as well as having lied about our situation by continually insisting, "The fundamentals of our economy are strong," the Bush administration, six weeks before an election, wants the middle class of this country to spend many hundreds of billions on a bailout. The wealthiest people, who have benefited from Bush's policies and are in the best position to pay, are being asked for no sacrifice at all. This is absurd. This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor.
In my view, we need to go forward in addressing this financial crisis by insisting on four basic principles:
(1) The people who can best afford to pay and the people who have benefited most from Bush's economic policies are the people who should provide the funds for the bailout. It would be immoral to ask the middle class, the people whose standard of living has declined under Bush, to pay for this bailout while the rich, once again, avoid their responsibilities. Further, if the government is going to save companies from bankruptcy, the taxpayers of this country should be rewarded for assuming the risk by sharing in the gains that result from this government bailout.
Specifically, to pay for the bailout, which is estimated to cost up to $1 trillion, the government should:
a) Impose a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. That would raise more than $300 billion in revenue;
b) Ensure that assets purchased from banks are realistically discounted so companies are not rewarded for their risky behavior and taxpayers can recover the amount they paid for them; and
c) Require that taxpayers receive equity stakes in the bailed-out companies so that the assumption of risk is rewarded when companies' stock goes up.
(2) There must be a major economic recovery package which puts Americans to work at decent wages. Among many other areas, we can create millions of jobs rebuilding our crumbling infrastructure and moving our country from fossil fuels to energy efficiency and sustainable energy. Further, we must protect working families from the difficult times they are experiencing. We must ensure that every child has health insurance and that every American has access to quality health and dental care, that families can send their children to college, that seniors are not allowed to go without heat in the winter, and that no American goes to bed hungry.
(3) Legislation must be passed which undoes the damage caused by excessive de-regulation. That means reinstalling the regulatory firewalls that were ripped down in 1999. That means re-regulating the energy markets so that we never again see the rampant speculation in oil that helped drive up prices. That means regulating or abolishing various financial instruments that have created the enormous shadow banking system that is at the heart of the collapse of AIG and the financial services meltdown.
(4) We must end the danger posed by companies that are "too big too fail," that is, companies whose failure would cause systemic harm to the U.S. economy. If a company is too big to fail, it is too big to exist. We need to determine which companies fall in this category and then break them up. Right now, for example, the Bank of America, the nation's largest depository institution, has absorbed Countrywide, the nation's largest mortgage lender, and Merrill Lynch, the nation's largest brokerage house. We should not be trying to solve the current financial crisis by creating even larger, more powerful institutions. Their failure could cause even more harm to the entire economy.
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It's too bad you're not running for Prez, sir - you'd have my vote!
Bush and his neoconservative economic team are crying: "Urgent! We must fix this now! Just sign on the dotted line!" Sadly, Congress--who can't seem to understand that Lucy is once again holding the football for the Charlie Brown Democrats to kick--is going right along with it. Chris Dodd saying on television about how scared Paulson made them all is an example of this. Haven't they learned anything since "we don't want the smoking gun to become a mushroom cloud?"
I've been waiting to hear your opinion, Senator Sanders. You, Byron Dorgan, David Walker (the former Comptroller General), and a few others are the only ones I trust. PLEASE get your plan through their thick skulls! PLEASE get these guys to understand they can't keep blindly following these neoconservate corporate welfare programs! You have no idea how helpless we feel these days.
"If they're too big to fail, they're too big to exist." The most sane line I've heard in days.
Republicans, like Palin, keep singing the praises of "small-businesses," calling them the backbone of this country. It seems to me we have three or four huge companies in every industry and then maybe a sprinkling of small businesses. Are these guys delusional?
This represents the compromise between socialist and capitalist principles. For too long the American public has been sold on the Free Market. We can actually have a system built not on greed as a principle but on what supports mutual survival, an equally powerful concept. No addition to the economy should be allowed unless there is added wealth both to its entrepreneur as well as the workers and consumers who will make it happen. We must replace laissez faire capitalism with ethically evident capitalism. Sen Sanders specific plans is a good start to the journey.
It is time to leave our neanderthal origins behind and understand that achieving global prosperity is the best hope for all. Those who achieve under these principles should be rewarded but those who seem bent on destroying a meaningful lives should be curtailed. Is this a pipe dream? I don't know. However I do believe human beings have the capacity to reexamine if they are following the right track. At present 80% of people now feel we are not there. It is time to take advantage and set a new economic philosophy in motion.
Thanks Rep Sanders for your great article. I have been wondering everyday why we aren't making people give back these golden parachutes to help pay for this bailout. I have always said that there is only so much money. At a point you are stealing the abilities of other people to even survive when you make so much money.
Your talking about billions of dollars. We are going to need Trillions of dollars to even get started. With the US dollar's value being what it is, even trillions won't be enough. America is going down. Good luck to us all, we are going to need it.
NO MORE BAILOUTS! We are rewarding the greed, fraud, unethical behavior, and debt accumulated by lenders if we cover their bad loans. They stole billions of dollars and lived high off the hog for years and should go broke. Instead anyone who responsibly loaned or borrowed money and made a reasonable profit is being told they are fools. American capitalism wants everybody to be in debt. What’s wrong with credit being hard to get and expensive? Maybe people will take it seriously like in the past. Everyone is not responsible enough to acquire debt. Lenders used to know this and screened applicants. Now with the taxpayer picking up the tab who cares who you loan to?
Furthermore the government is printing money and borrowing to cover these debts and paying more interest to do so. How long do you think people are going to take to realize the dollar is moving toward worthless? When the majority of our economy is based on moving money back and forth and producing nothing, it is doomed to eventual collapse. Let it be now. The longer you prop it up the worse the fall is. We can’t maintain an economy based on continually increasing consumption. When it is based on debt it compounds the problem. How much debt can the consumer and the government accumulate before everyone realizes it will never be paid back? Then instead of the companies responsible going bankrupt the government will go bankrupt. Which is worse?
McCain and the POW Cover-up ...
The "war hero" candidate buried information about POWs left behind in Vietnam
http://www.nationinstitute.org/p/schanberg09182008pt1
Charge 1% on every financial transaction.
"This is the most extreme example that I can recall of socialism for the rich and free enterprise for the poor." Well crystallised Sen. Sanders. Convenient role reversals and changing of the rules to suit the fat cats. Heads must roll if capitalism is to be taken seriously.
Making us one day older and deeper in debt will be the only result of this bailout!
Borrowing to keep the ponzi extortion racket afloat until after the election will not fix any of the underlying economic problems, and will only further handicap us from ever addressing them.
Jobs will not be created, water systems will not be repaired, electrical grids will not be upgraded, mass transit will not be built, schools will not be fixed, health care will not be improved, the war-dependent economy will not be transformed, and neither will retirement benefits be saved.
Thank you Senator Sanders. You are right on the money. All the folks who rail against Obama and call him a "socialist" need to have pause and consider that because of these bailouts, we now have the largest socialized banking and insurance system in the free, capitalist world. How's that for small government, light regulation and fiscal conservatism?
The Bush tax cuts have been an unmitigated disaster. When I commented on Bush's complete economic ineptitude, someone tried to make the case that the president is somewhat of a figurehead, and it is really the cabinet that represents the executive branch. While there is some truth to that, the fact that Bush's cabinet is completely inept as well is a true representation of Bush himself. He is an uneducated, unsophisticated, stubborn to a fault dimwit. We have to have a smart president this go round, but one that is well educated, too. Otherwise, our economic policies are going to fail us all if they continue to go forward in their present form.
The Bailout is the real Bridge to Nowhere for those who are either too poor or too moral to be directly invested in The System. Meanwhile the middle class, especially those with stock, will swallow and regurgitate the lines about how it's needed to get back to the oh-so-finely-tuned trickle-down process. And, behind the curtain, the bandit billionaires will continue to siphon the big proceeds, laughing all the way to the offshore banks.
If they once again favor the rich and forget the rest, then we will all go down together when we go!
The rich will not be able to sustain their industries no matter how propped up they are, if the people are so damaged that they are all impoverished.
Believe me when I say that there is much protien and many calories in the rich! The world will go down with us and there will be no sanctuary for the plump and succulent!
For those companies "too big to fail," it seems like there are two options: 1) break them up into smaller, competitive companies; or 2) nationalize them like we're in the process of doing now in the financial industry. Of course, breaking up a bankrupt company into a number of smaller, bankrupt companies doesn't seem to make much sense or solve the associated problems. And breaking up a large, successful company like Bank of America has its own set of problems.
Viewed from a broader perspective, in mature industries such as the petrochemical industry with a small number of vertically integrated companies that provide a vital service and act as a monopoly, it makes more sense to nationalize them, along with "to big to fail" companies like BofA, preserving and adding to their economies of scale. This has the added advantage of providing revenue streams to help take up the slack for the dud companies we're forced to buy out.
The decision has already been made by the Bush Administration and the Congress that nationalization for these mega-corporations is the solution of choice. It's a new day and a new way. Identify the "too big to fail" corporations and industries now and follow the current course to its logical conclusion.
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