The bailout bill went down to defeat in the House of Representatives this afternoon, with the Republicans trying to pin the blame on Nancy Pelosi for making a speech that they say drove away Republican votes. It’s good to see that the Republicans still have the presence of mind to try to spin some political points out of the imminent meltdown of the world economy, but I scarcely think that Pelosi’s speech had anything to do with it. The Republicans are trying to have their cake and eat it too by voting down this bill. Their sudden insistence on “free market principles” was nowhere in sight as they bailed out Fannie MAE, Freddie MAC and AIG, but now they don’t want to be seen handing over the keys to the gate long after the horses have already left the barn. The fact that the general public is still about 3-to-1 AGAINST a bailout bill probably has a lot more to do with it. Even the Dems didn’t all vote for it, which I think is worth noticing. The leadership needed to pass a bill, so they took the least-terrible set of compromises they could come up with, but they still couldn’t get everyone on board. Dennis Kucinich, for example, voted against the bill. So did my Congressman, John Tierney Here’s the complete roll call.
It’s not hard to find a lot of well-qualified people who are ready to line up and say that the original Paulson bill was unacceptable, but even the “compromise” bill worked on over the weekend has seen nothing but tepid support. At this stage, not passing the first thing to hit the floor is probably the best thing that could happen. Another bill will have to push a little bit more, even if the Republican reluctance is a cynical ploy. The weak-willed and useless Democratic leadership should be looking for something more than an overnight solution, since they’re going to be the ones still in control of Congress after November. George Bush has achieved the one thing he set out to do: set the whole world on fire and then sneak out the back door to let someone else handle the hard part. Nancy Pelosi, Barney Frank, Harry Reid, Chris Dodd, et.al. won’t have the luxury of walking away.
Last week I mentioned that Vermont Senator Bernie Sanders was calling for a completely different approach to this crisis, and now he’s elevated that call to the status of an actual petition. Sanders’ petition acknowledges what many of us believe will happen: the arrival of a significant depression to rival or exceed the scale of the Great Depression of the 1930s. And, borrowing from the way Franklin Roosevelt acted to alleviate some of the personal misery that befell so many people, Sanders’ proposal is simple, direct, and aimed at the average person, not the Wall Street arbitrageur whose portfolio shrank from $400 million to only $350 million. His proposal is thus:
1. Ensure that middle income and working families are not the ones who are paying for this bailout by
* Imposing 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 over five years;
* Ensuring 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
* Requiring that taxpayers receive equity stakes in the bailed-out companies so that the taxpayers’ assumption of risk is rewarded when companies’ stock goes up.
Taken together these three provisions will substantially reduce the likelihood that this bailout will end up on the backs of average American taxpayers.
2. Include 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 our must vulnerable families from the very difficult times they are experiencing.
3. Repeal the disastrous de-regulatory legislation that facilitated this crisis.
4. End the danger posed by companies that are “too big to 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.
The first point addresses the reality that it is the rich who stand to benefit the most from any bailout plan. As a society, we must stop enabling the rich to steal again and again from the pockets of the middle class. There are many calling for a flat tax that would similarly place the burden of financial obligation on those who have benefitted the most and manage to contribute the least due to tax loopholes, legislation that favors the wealthy, and other systemic iniquities. I think the surtax described here, temporary and focused on the wealthiest, is a better idea.
But it is Sanders’ second point that needs the most support. Economic recovery WILL NOT HAPPEN by saving the fortunes of the wealthy. As a society we have to disabuse ourselves of the warped view that we have adopted toward the distribution of wealth. It may have worked for a few of decades after the Second World War, but since the 1980s the concentration of wealth into such a tiny percentage of the population has become pathological. We are going to pay the price for that as businesses start to go belly up over the next year or two, and we are not well-equipped to do so. The fedferal government can and should prepare for the mobilization of unemployed workers in a second New Deal that seeks to restore the infrastructure of the nation, reinvest Americans in their own communities, and create new structures for business in the future than are less dependent on the failed model of credit capitalism.
Sign the petition, but take it to the next step and communicate this to your congressional representatives, particularly if they voted for the bailout today. Congress CAN do something if they aren’t rushed by the Bushies to take any deal they can get. We need a good deal, a new deal to move forward.
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