*Article Printed from Senator Sanders Website - Sanders.Senate.Gov
<http://Sanders.Senate.Gov>
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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.
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--
Rudy Fichtenbaum
Professor of Economics & Chief Negotiator AAUP-WSU
Department of Economics
Wright State University
Dayton, OH 45435
Phone: 937-775-3085
Fax: 937-775-2441
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