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
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.