The Middle Class Must Not Be Forced to Bail Out Wall Street Greed
by Bernie Sanders
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 dont 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.
Bernie Sanders is the independent U.S. Senator from Vermont. He is the longest
serving independent member of Congress in American history. He is a member of
the Senate's Budget, Veterans, Environment, Energy, and H.E.L.P. (Health,
Education, Labor, and Pensions) committees.
[Non-text portions of this message have been removed]
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