The Middle Class Must Not Be Forced to Bail Out Wall Street Greed

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 four 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.

Comments

[rcollori]

I want to know where to go to sign Bernie Sanders petition to have the billionaire CEO's who
reaped unimaginable rewards for their greedy, underhanded business policies and I feel
certain criminal practices. They should have everything taken from them.
I have felt this way all along but our Congress lacks any leadership or imagination to look
for the solution other than "We'll make the taxpayers pay for it". That is the simple solution and
they can go home all swollen with gratification for solving the problem for now anyway.
I had no hope from our leaders for any other solution than to stick it to the taxpayer.
I have always had to pay for my mistakes so should anyone involved in this plunder of our
economy and that includes the Congressmen and women who voted to remove sound common
sense regulations.
I want a solution but I also want justice.

[WestCoastTruth]

I respectfully suggest that Sen. Sanders might be interested in the following links


http://www.youtube.com/TheMouthPeace

http://www.youtube.com/watch?v=_MGT_cSi7Rs

http://mises.org/story/2963

[yakmeat]

The proposed bail-out will cost $700 Billion (maybe more). This equals about $5,072 for every taxpayer in America. If they're going to use our money, we must be treated as investors, not as donors. If the proposed plan works, that $700 Billion investment will eventually turn a profit.

If those profits are kept by Wall Street, the taxpayers end up becoming donors. Some in Congress have suggested that when the banks start making money again, they should share profits with the government. When profits are made, dividends are paid to shareholders. That idea only gets half-way there. Since we are the shareholders, the government should pass those dividends on to us. Each $5,072 "share" should be treated as any other private individual investment. It might be easier to convince us to go along if they agree to just pay each of us individually in cash. Think of it as another "economic stimulus payment", only this kind happens more than once. Because just like with privately held investments, dividends would be payed to each "shareholder" until we choose (individually) to cash out our "stock".

America currently has a negative per-capita savings rate. That could change immediately if every American taxpayer got a tax-deferred $5,072 investment portfolio to help finance college educations or retirement. The benefits could go further if (like with private investments) our children could inherit our "stock" when we die. Such a plan might solve more than just Wall Streets problems.

[GingerB]

I wish we had 60 more like Bernie Sanders in the Senate right now.

[gerimd]

This whole thing makes no sense. Why would anyone ask for such a staggering sum of money with no information given and the condition that there be no conditions? And who in their right mind would even consider such a ludicrous request?

It's as if they want to be turned down. Something smells fishy.

[blwtym]

Why not do what we did after 9/11 (Bush's suggestion) Give that 700 billion to the middleclass, equalized so we all have the same amount of money and then George Bush can give a Presidential speach telling us all to GO SHOPPING!! I can't think of better way to get the economy back. Those who are about to lose their home to forclosure, will have the money to bail themselves out, people will be buying everything from food to cars, electronics,houses etc. just don't hand it over to the white house with no strings attached and expect to get a better or different outcome than what we have now.

[berrycooda]

We must have a lot of people in this country who can't read. They take mortgages and don't take a
fixed rate interest so they can save up front.....then they whine when the payment goes up.

Then another group are living in big fancy houses without putting any money down and their incomes
are probably under 25,000 per year.

Whatever happened to putting 20% down in order to buy a home. Then you bought what you could afford, not some 250,000 place and then fill it up with furniture purchased with a visa card.

In the meantime....wall street CEO's got wealthy and are probably panicking now because they are heavily invested in the stock market and are losing their "life savings" just like they have caused the common person to do. No wonder they are pleading for a bailout.

[Jason Abdon]

If these corporate gangsters are going to hold our economy hostage, 50 to 100 percent markup on all money lent. After all, that's what they would ask of us. And some body, if not hundreds should be going to GOD DAMN jail. If our elected gangters don't like this, we have hundreds of
nooses and utility poles after a very short trial in the peoples court.

[Star2000dancer]

They did it, they pay. Take their homes, cars, bank accounts, healthcare, pay checks, bonusus, sell everything they own, put judgements on them & garnishes their wages, .

That;s what they did to us, it's time to see how they like it. Especially anyone who made a dime from war profiteering, mortgages or oil. It is time forthese criminals who killed so many people not only in wars, but for what they've done to WE THE PEOPLE to PAY THEIR DUES!!

[quest44]

No we don't have to give into this bail out its unconstitutional.Read the Constitution please !
Nobody not Bush, Cheney, Paulson, Bernanke, Congress or the Senate can use tax payers money to bail out institutions or private parties under the laws set forth in the Constitution !

Once again our Constitution is ignored by the Bush administration and it seems most of Congress and the Senate .Maybe those who take political office need refresher courses in Constitutional Law ?

Paulson already said that a bail out may not work so why take a risk ? I don't play the markets and I don't take risks on anything where it has failed before under the same leadership. Paulson knew with runaway inflation in the market this could happen and he did nothing to avoid this crises so why should we have trust in him this time to straighten it out .
I say No bail out at the risk of my children and grandchildrens future !

[Snwbnny9]

Thank you Senator.
Please stand firm against any Bill which would authorize Bush to place 700 billion dollars in the hands of Secretary Paulson, with no oversight.

These are the scariest 32 words I have ever heard:
"Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

[WelfareRecipient]

HuffPost's Pick

We have a small refinery in Lima, OH that is producing the minimum amount of gasoline, with inventories flowing over, and we have a Democrat for a governor...who does nothing...all while the price of gas continues to go up. You want to blame a party for all of the financial problems, but greed doesn't associate itself with a political party. We complain about high energy prices, high food costs, high cost of health insurance, but what do we end up doing? After the smoke is settled, and the dust is cleared, we continue with our lives, make adjustments to our way of life, and move on...without making adjustments that will increase the quality of our lives. This is the American way...we become sheep. We never will agree on every issue that's before us...gun rights, right to choose, same sex marriage, and so on. But these issues are micro, and we, the people, of this nation, need to focus on the bigger picture...the picture that effects our daily lives. Party politics are only a means to divide us, a smoke screen, a way of keeping us, the people of this nation, from truly uniting. And that's where we are today...divided over mico issues. Until we find a way to bottle the hot air that we release on these blogs, we will continue down the same road. Pick up your phone, call your Congressman. And for our own good, please don't play party politics.

[JXJASON]

Thank you Senator Sanders. I happen to agree with you.

To all you readers...First look at your own life.

Did you earn a retirement package of $18,000,000???

Did you get yearly bonuses of $5,000,000 per year???

Was your weekly salary over $5,000 per week??? ( $5,000 X 52 weeks = $260,000 per year )

If the answer is no then you are not rich.

If the answer is yes then did your shareholders make money on your company's common stocks or did they lose money??? And did you pay dividends???

For all of you who answered no...who are not rich...email Senator Sanders and thank him AND
VOTE FOR SENATOR BARACK OBAMA AND SENATOR JOE BIDEN.

OBAMA / BIDEN 08

[Star2000dancer]

ADD TO THAT ANY DEDUCTINS YOU HAD, BECAUSE THAT $250,000,000. MEANS CLEAR.

IF I HEAR ONE MORE ELITIST SAY I DO'NT PAY TAXES BECAUSE I'M TOO RICH, I THINK I'LL JUST SCREAM!!1

[cafemocha]

Allowing the Bush administration total freedom to manage a Wall Street bailout is like allowing big tobacco companies to manage health care and perform surgery on lung cancer patients.

[haveitoldyoulately]

THIS WAS NOT CAUSED BY THE REAL MIDDLE CLASS

I wish someone would enlighten America & politicians that Middle Class is someone making $30 - 50 thousand a year (which seems to me to be the Poor Working Class actually when you hear these numbers).....Let the people making 100,000 and over pay the bill. Or has middle class just become a state of mind. Get real....the real middle class should be getting on that bailout line. The working middle class has been in economic meltdown for years. They are the real people getting hurt every time the government needs a cutback...taxes go up, medicare, social services, etc. get cut. They have no consideration for the elderly whatsoever. I resently heard senior citzens living on social security and medicare are not covered for hearing aids or dentures.....WHO but the seniors would NEED them. ahh, but yes, it's not a life threaten need.....Let their mothers or fathers not be able to go out because they cannot hear a car horn.....or choke, because they cannot chew their food.
Maybe Wall Street should take some lessons from the REAL middle class who don't and really cannot afford to mismanage. Washington and Wall Street need to get Real

[JusticiaParaTodos]

The crisis in our economy was caused by corporate greed plain and simple. The billion dollar a week unjustified war is a part of the issue as well.
The Republikans and other neo-cons whoop and holler about welfare, but just what is bailing out the greedy banks? Deserving charity? No, my friends this is called welfare for the rich!

Our economy, our constitutional rights and our once great nation is collapsing! Yet my liberal and conservative friends still believe in the system. My only reply is: WHY?

Bush is a criminal and he will get away with his crimes all because chicken livered democrats won't call him to the floor for his acts of cowardice, greed and arrogance!

[deminmo]

Senator, two things are at fault for the crisis; deregulation and greed.
Then beyond that is betting on high returns in speculating on high risk
ventures. My taxes are being wasted in this bailout. Paulson is set to
take over with no oversight, and unlimited power on what he bails out
the next time. At first, the bailout was $500 billion. Now today I heard
it may be higher than $700B. With only 4 days to decide the fate of millions
of people and their money, are you and other Congress people more interested
in hitting the campaign trail, or in protecting our futures, our country and our
future? You have until Friday September 26 to answer.