Oct 22, 2008
These are frightening and unusual times. The world of finance and the overall economy are both in perilous condition.
Almost every day a new crisis erupts. The stock market has plunged
dramatically, and is more volatile, than at any time in memory. Loans
between banks have dried up. Major financial houses have either failed
or merged. Government bailout follows government bailout.
Just how deep the financial crisis
is can be seen from this paradox: the Bush administration, the most
wild and irresponsible defender of right-wing economic ideology and
free markets in our nation's history, now has to muster one initiative
after another to intervene in the financial markets. It is even in the
process of nationalizing banks.
The economic crisis has received less attention in the media than
the financial crisis, but it is no less real or threatening.
Unemployment, which is conservatively estimated in our country, last
month hit a five-year high of 6.1 percent, and it is rising. In July,
home prices - the main source of most Americans' wealth - fell 16
percent in 20 U.S. cities from a year earlier. The bottom is nowhere in
sight. Foreclosures are at the highest rate in almost three decades.
Health care, food and educational costs are rising, and more and more
Americans are lining up at emergency shelters and food shelves.
Meanwhile, during President Bush's tenure in office, the gap between
the very wealthy and everyone else has dramatically increased. While 6
million Americans have slipped into poverty, while median income for
working families has declined by more than $2,000, while 7 million
people have lost their health insurance and 4 million workers lost
their pensions, the highest income Americans have made out like bandits
- which many of them are.
In Bush's first seven years, the top 400 individuals in America saw
an increase in their wealth of $670 billion, so that by 2007 the top 1
percent earned more income than the bottom 50 percent. Tax cuts for the
wealthy, unfettered free trade, no-bid contracts, deregulation of every
conceivable market and a belief that markets are the best determinant
of social policy have together brought about a massive transfer of
wealth from the middle class to the very wealthy. The backbone of the
American economy for the past 50 years, a strong and prosperous middle
class, has been severely weakened by the extremist policies of this
administration. The economic future for the next generation looks bleak.
At this pivotal moment in our history, the American people are
demanding fundamental changes in our nation's economic policies.
Congress will be reconvening for a lame-duck session on November 17.
What should we do? The proposals that have been coming out of
Washington, in my view, are not sufficient.
If you could read the
e-mails that pour into my office from Vermont and across the country,
you would realize how furious the American people are at the greed,
incompetence and irresponsibility of the Masters of the Universe on
Wall Street who made billions while they drove our financial system to
the brink of the abyss. Middle-class citizens of this country do not
believe that they, who had nothing to do with causing this financial
meltdown and who already have suffered as a result of Bush's reckless
policies, should have to pay for Wall Street bailouts.
They are absolutely right. Congress must demand that the cost of any
bailout should be paid by those who benefitted financially from Bush's
policies and those who can best afford it. I proposed an income surtax
of 10 percent on families earning more than $1 million a year. I will
continue to fight so that any bailout is progressively funded.
In terms of any federal intervention, we need to insist that if the
government buys mortgages and mortgage-backed paper - the so-called
'toxic assets' - it should be at current market prices, not at the
price the lender set at the time of the loan. We should require equity
stakes for taxpayers - something a British initiative seems to have
forced Secretary Paulson into imitating. We also need to follow the
British model of demanding that banks taking taxpayer money put
taxpayer interests ahead of corporate profits, executive payouts, and
risky investment strategies. Congress, as soon as possible, needs to
reverse years of deregulation,
and require accountability and transparency in the financial industry.
It is beyond insane that tens of trillions of dollars of credit default
swaps are circulating with no one knowing who owns these complicated
instruments or what role they play in the financial markets. We also
must pass new anti-trust legislation to make sure that in the future no
entities are "too big to fail." If a financial institution is too big
to fail, it is too big to exist.
When Congress reconvenes, it is clear to me that it must pass a massive "Rebuild America"
program in order to address the looming economic crisis. If we can put
up $700 billion to rescue bankers from their irresponsible decisions,
we must make a major investment putting millions of Americans to work
rebuilding our country.
I agree with a number of economists who have told us that, in order
to get our country back on sound economic footing, we should make a
major investment in repairing our crumbling transportation systems and
electric grid. After decades of delay, we must end our dependence on
fossil fuel and foreign oil and move boldly to energy efficiency and
new sources of sustainable energy.
We also need to address the social crises we face in terms of
education, health care, nutrition, and poverty. In the midst of the
current economic crisis, we must minimize the suffering of the most
vulnerable among us, and we must ensure the future of our country by
developing the best-educated workforce in the world.
Let me be specific about what a "Rebuild America" program should include:
We should make a major financial commitment to improving our roads
and bridges. We must develop energy-efficient rail lines for both
freight and high-speed passenger service and promote public
transportation. We need to bring our water and sewer systems into the
21st century. In terms of job creation, every billion dollars invested
in the physical infrastructure creates 47,000 new jobs.
We should make a major financial commitment to energy efficiency and
sustainable energy. With a major investment, we could stop importing
foreign oil in 10 years, produce all of our electricity from
sustainable energy within a decade, and substantially cut greenhouse
gas emissions. We can make the United States the world leader in the
construction of solar, wind, bio-fuel and geothermal facilities for
energy production, as well as creating a significant number of jobs by
making our homes, offices, schools and factories far more energy
We should make a major financial commitment to education. We must
end the disgrace of millions of children under five attending totally
inadequate child-care facilities while millions of other families are
unable to afford a college education. We must invest in new classrooms,
new computers, energy-efficient heating and cooling systems. That would
not only create jobs, but relieve some of the burden on the regressive
In these harsh economic times we should extend unemployment benefits
from 26 weeks to 39 weeks, so that more than 1 million Americans do not
run out of their benefits by the end of this year. We should increase
eligibility for food stamps and other nutrition programs to assist the
hard-pressed middle class as well as the poor. We should substantially
increase funding for the highly-effective community health center
program so that, at a minimum, all Americans have access to affordable
primary health care, dental care, and low-cost prescription drugs.
Finally, with cities and states facing deep deficits and cutting
basic services, we must make a major, immediate financial commitment to
states and municipalities. Their crisis will only grow worse as homes
are foreclosed, as income and capital gains decline, as fees on sales
of homes and motor vehicles diminish. For too long, unfunded federal
mandates have drained the budgets of states and communities. The
strength and vitality of America's communities must be restored.
The American people today are angry and confused. They feel they
have lost their grip on the reins of power in our democratic society.
While crooked Wall Street executives walk away from failing companies
with millions in golden parachutes, middle-class Americans are seeing
their life's savings disappear and their dreams for their kids
I hope a new Democratic president will take office in January along
with expanded Democratic majorities in the U.S. House and U.S. Senate.
With strong grass-roots participation, we can pass legislation which
creates millions of good-paying jobs as we address the major economic
and social crises that confront our country. Now is the time to begin
restoring the faith of the American people in our government. Now is
the time to make government work, not just for the wealthy few, but for
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