Before he lost his mind, Ralph Nader once described George W. Bush as a corporation impersonating a human being.
Turns out we didn’t know how right Nader was. Last week, following the on the stock market plunging over 500 points in it’s biggest day of losses since 9/11, the crumbling of Lehman Brothers and Merrill Lynch, the government of Freddie Mac and Fannie Mae and the near failure of American Insurance Group, Bush woke up to one of the greatest financial crisis the nation has faced since the Great Depression.
Now Bush wants a $700 billion life preserver thrown to his corporate cronies.
The first thing to do is not allow the same bumblers like Treasury Secretary Henry Paulson stampede the Congress into saddling the American taxpayer with billions in bad debt to save stupid businesses from their stupid decisions.
McCain has mumbled something dumb about how the economy is fundamentally sound and how, if elected, he’d fire the SEC chairman (though that’s not a power the president possesses). Obama has said without offering specifics there should be be no bailout for Wall Street without help for Main Street. I agree, but for some more concrete suggestions I’m going to Senator Bernie Sanders for answers.
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. link
Leave it to a Socialist to come up with a plan to save failed capitalists.
Laissez-faire economists and their amen chorus have preached for years that government should get out of the way of the free market and allow it to work its magic. It would appear there are no rabbits in the magician’s hat and they have come with it in their grubby little hands asking the same government that permits 8,000 families a day to lose their homes in foreclosure, to now save them from their own sub-prime mortgage mess, among other failed financial schemes.
If Bush wants to send them a nice big wad of money, I think it’s entirely appropriate for the government to also do something for the millions of Americans who are out of work and facing the end of their unemployment benefits.
The unemployment rate in this country is just over six percent; the highest it has been since 2003. Since January, more than 605,000 jobs have been cut from the economy. Because the job market is tight, many job seekers find themselves out of work for many months. Unemployment benefits typically last 26 weeks, or six months. In June, Congress extended the length of time a recipient may collect benefits to 39 weeks. For those who find themselves out of work much longer, losing what may be their only source of income could result in financial disaster. Considering the number of currently unemployed people in this country, it is not unlikely that this could create a chain reaction that not only affects individuals and families, but also the nation’s economy.
National lawmakers must work quickly and extend the length of unemployment benefits for out of work Americans. If there is no extension in place by October, 800,000 unemployed people will stop receiving their much-needed benefits. There is currently a bill in front of Congress that would extend unemployment benefits for up to 46 weeks. States with high unemployment rates, like Michigan and California, will have the power to extend benefits for up to a year. link2
Billions for Fannie Mae and Freddie Mac, AIG, and BearSterns, but nothing but an I.O.U. for the taxpayers. Both Republicans and Democrats should put the brakes on this fast-track hand-out. Granting vast new powers without carefully understanding what Bush and Paulson, who worked on Wall Street, are trying to slam through would be yet another aberration of Congressional authority.
I intend to tell my representatives to take their time and if they grant this hand-out, get it done right, don’t just get it done fast the way Paulson wants it rammed through. When you’re about to put taxpayers on the hook for billions of dollars, it’s not a bad idea to make the bankers and bureaucrats sweat for it a bit. There should absolutely be no corporate welfare without restrictions, regulation, reform and relief for ordinary Americans.
Oh, and each and every one of the CEOs of the failing banks, investment groups, and insurance companies should be forced to resign, their golden parachutes taken away and given a job befitting their miserable managerial skills. Maybe let ’em run the mailroom or courier service.