The Bail Out Proposals: Sanders v Bush


Crossposted from MY LEFT WING

DIGG THIS, please

UPDATE: The Bush Administration has handed in an utterly heinous proposal for the bail out, as I surmised in -- my ruminations on Sanders's brilliant proposal below his text...

LEGISLATIVE PROPOSAL FOR TREASURY AUTHORITY TO PURCHASE MORTGAGE-RELATED ASSETS

... making Sanders's proposal all the more attractive and even more NECESSARY a consideration. The Democrats in Congress cannot ignore Sanders's proposal given the outright power grab that Paulson's proposal clearly is. I'm frankly astonished at Paul Krugman's relatively mild response to this clearly fascistic proposal from the Bush Administration.


Sanders Op-Ed: Billions for Bailouts! Who Pays?

09/19/2008

By Senator Bernie Sanders

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.

In my view, if Obama were to sign on to this proposal by Bernie Sanders, the inherent wisdom in its sensibility and populism would put him over the top and leave McCain in the elitist dust where he lives.

My instinct is that Obama will not, however. I get the feeling Sanders issued this proposal in the wee hours precisely because the congressional leaders who met with Bernanke and Paulson are hammering out their own proposal as we speak, and Sanders wanted to get this out there first -- because he knows there's not a chance in hell something this reasonable will be on the table.

No, we'll likely be getting a proposal that shafts the vast majority of the American people, and Obama will be asked to sign his name to it or seem the traitor -- the first twist of the knife by his own party members, the first not-so-gentle reminder to him and to us of just who is who and what is what. NOT so fast there, kiddies, with that Hope and Change schtick. Just so you all remember, when you look at those polls and start thinking about all those wonderful reforms you'll be wanting to pass when President Obama takes office -- this is OUR America, and President Obama is, after all, Our Man.

But  perhaps Sanders released it on the off chance that Obama has the derring do to take the sort of risk with the sort of pay off this act would entail?

Because... consider it. This proposal is not outlandish or unreasonable. It is not in Dennis Kucinich- Department-of-Peace-territory. This proposal is eminently fair. This proposal has "wildly popular with the American people if it ever saw the light of day" written all over it.


Tags: bail out, Bernie Sanders, economic crisis (all tags)

Comments

13 Comments

That's how I see it, anyway.

by Maryscott OConnor 2008-09-20 11:50PM | 0 recs
This is some of the most sensible...

...commentary I've seen reported in the press in the past 72 hours!

Of particular import, in terms of what's going on in Washington this weekend, are items 1(b) and 1(c):


(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.


by bobswern 2008-09-21 12:05AM | 0 recs
Brilliant..

This concept of TOO BIG TO FAIL = TOO BIG TO EXIST is an important one..

We need to introduce much more redundancy into our economy because as it gets more efficient, we depend more and more on mega-companies that increasingly are so efficient they don't need people. Ultimately, that means far fewer jobs and it also means less competition and higher prices and worse customer service.. i.e. "We don't care, we don't have to"

Slack, is what we need. Controlled slack.

Otherwise, we will have an economy that just hums along - and without people or jobs, it will implode.

by architek 2008-09-21 04:19AM | 0 recs
Re: The Bail Out Proposals: Sanders v Bush
Whatever plan emerges, if there isn't some mechanism built-in to pay for it (like Sanders' 10 percent surtax idea) it's a bad plan. In fact, if we're truly facing the worst economic crisis in our country's history, the surtax should be 20 or 30 percent. Let the rich demonstrate their patriotism and allegiance to our country by, for once, helping the country from whom they have taken so very much.
by zenful6219 2008-09-21 04:49AM | 0 recs
They are already moving cash offshore

7000 former US companies in one four story building in the Cayman Islands, that is empty after noon every day, for example..

But, I say, GOOD RIDDANCE...

by architek 2008-09-21 05:35AM | 0 recs
More "sunshine" needed here

This practice needs to be outlawed, period.

by Betsy McCall 2008-09-21 08:48AM | 0 recs
Or, Allied World Holdings...

...a joint venture between A.I.G. and Goldman Sachs from which A.I.G. withdrew around 2005 (where Treasury Secretary Paulson spent the previous 32 years of his career prior to being named Tresury Secretary), based out of Bermuda, with so little capital behind it (because of Bermuda laws), that it's a train-wreck-in-waiting if any major claims are made against it, just like those CDS's, or credit default swaps insured by A.I.G. around the world (tens of billions of dollars worth), which are at the heart of the entire mortgage meltdown now!

by bobswern 2008-09-21 07:58AM | 0 recs
Let the Bastards Rot in Hell
Staff at Lehman's New York office, who helped to cause the world's biggest corporate bankruptcy, are to share in a $2.5 billion bonanza. The bonus has been pledged by Barclays Capital, the British-based bank that acquired Lehman's American operation. Before Americans taxpayers give one more cent to Wall Street, Congress should impose caps on wages and bonuses for key players in this crisis. Otherwise, call you Congressman and tell them to let the bastards rot.
by zenful6219 2008-09-21 10:43AM | 0 recs
Breaking:


The Anonymous Democratic Congressperson's Email That Signals We JUST MIGHT Win This One


Paulsen and congressional Republicans, or the few that will actually vote for this (most will be unwilling to take responsibility for the consequences of their policies), have said that there can't be any "add ons," or addition provisions. Fuck that. I don't really want to trigger a world wide depression (that's not hyperbole, that's a distinct possibility), but I'm not voting for a blank check for $700 billion for those mother fuckers.
Nancy said she wanted to include the second "stimulus" package that the Bush Administration and congressional Republicans have blocked. I don't want to trade a $700 billion dollar giveaway to the most unsympathetic human beings on the planet for a few fucking bridges. I want reforms of the industry, and I want it to be as punitive as possible.

Henry Waxman has suggested corporate government reforms, including CEO compensation, as the price for this.  Some members have publicly suggested allowing modification of mortgages in bankruptcy, and the House Judiciary Committee staff is also very interested in that.  That's a real possibility.  

We may strip out all the gives to industry in the predatory mortgage lending bill that the House passed last November, which hasn't budged in the Senate, and include that in the bill.  There are other ideas on the table but they are going to be tough to work out before next week.  

I also find myself drawn to provisions that would serve no useful purpose except to insult the industry, like requiring the CEOs, CFOs and the chair of the board of any entity that sells mortgage related securities to the Treasury Department to certify that they have completed an approved course in credit counseling. That is now required of consumers filing bankruptcy to make sure they feel properly humiliated for being head over heels in debt, although most lost control of their finances because of a serious illness in the family. That would just be petty and childish, and completely in character for me.

I'm open to other ideas, and I am looking for volunteers who want to hold the sons of bitches so I can beat the crap out of them.

by Maryscott OConnor 2008-09-21 10:51AM | 0 recs
Pelosi & Reid should adopt it

The plan they've put forward so far isn't enough.

by Betsy McCall 2008-09-21 07:28PM | 0 recs
Re: The Bail Out Proposals: Sanders v Bush

This is a good proposal, although honestly, I doubt this has much of a shot of getting enacted. While I support it, the whole tax on those making 1 million dollars a year has a snowballs shot. Some of these other possible reforms such as limited the growth and giving tax payers more of their money could possibly become reality. Also, Sanders is a socialist, so endorsing his plan on the economy may not be the best for someone like Obama. Anyway, just my two cents.

Demockracy.com

by kjvd00 2008-09-21 09:45PM | 0 recs
Re: The Bail Out Proposals: Sanders v Bush

He's a socialist, probably to a greater degree than many other politicians, but he's not a Socialist. He is however, above all a US Senator from the smartest state in the nation.  ;-)

by greenvtster 2008-09-24 10:05AM | 0 recs
Re: The Bail Out Proposals: Sanders v Bush

Bernie. Sigh.

Signed, Voting the straight Bernie ticket since 1981.

by vermontprog 2008-09-24 10:44AM | 0 recs

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