The irony of the “bailout compromise” that is expected to pass Congress this week is that the largest-ever robbery of the US Treasury is actually being committed by banks. And like the rest of the lawbreaking overseen by this Administration and Congress, laws are furiously being re-written to make it legal. At least this time, they’re doing it in advance of the criminality.
One hundred prominent economists from the country’s leading universities have signed a letter to Congress saying that this bailout is unnecessary. Many members of both parties who still hold core beliefs and are not high-dollar recipients of Banking Industry political contributions oppose this bailout. The American public opposes this bailout by decisive margins in every poll conducted.
What’s the rush? The economy is not actually collapsing. None of the doomsday scenarios being proffered are very specific. Our government always reserves the right to close the markets and force a national bank holiday if things were to suddenly go south. Meanwhile, how about holding hearings, building support, and working transparently? That is the way representative government is supposed to work.
The most disturbing aspect of this “bailout” bill is how much power it vests in the Treasury Secretary. In fact, the most historically significant thing about this (Democratic-led) Congress is how much of its own Constitutionally-mandated power it has permanently ceded to the Executive Branch. Just like the Democratic-markup of the Bush surveillance law that passed this summer, this bill pays lip service to oversight and makes cosmetic suggestions that the Democrats can use in form-letters and talking points that address issues important to their constituents, but which are only in this bill as options to be used entirely at the discretion of the Treasury Secretary. That is not governing, that is cynical posturing, and it could spell the downfall of the party.
This bailout is a deeply shameful bill that will alter the fate of our country forever by assuming ballooning debt that will keep us in hock to our creditors like a third world country unable to govern itself. It does not “socialize” private businesses, as many on the right complain; it essentially privatizes our government and turns it over to banks and private corporations.
Government intervention in our economy is not the issue: that is often a good and necessary thing. This particular intervention, however, is being done in such a hurry and so in secret, controlled by the very people who got us into the mess, with the cooperation of the very people who have betrayed every principle of our democracy. We must do everything in our power to stop this bailout if that is still possible, and we must do everything in our power to defeat our Members of Congress who vote for it, no matter how much we may “like” them.
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Rep. Marcy Kaptur is the longest-serving woman in the US House of Representatives. First elected in 1982 from a solidly middle class Catholic district in Toledo, Ohio, Kaptur has maintained a remarkably progressive voting record in her 26 years in Congress. She is enormously popular in her district, winning 60-80% of the vote in most elections.
Listen to Rep. Kaptur speak clearly on the “bailout:”
Kaptur has never been too friendly with the corporate wing of the party and has failed to play party politics well enough to capture any influential committee chairs. In 1996 her strong stance against NAFTA invited a bid from Ross Perot to be his running mate, which she rejected.
A religious Catholic, Kaptur holds more moderate-to-conservative views on abortion and stem-cell research, and has broken with the rest of the Congressional Progressive Caucus on a couple of votes on those issues. She does not, however, oppose Roe V. Wade, and believes in the right to privacy and keeping government regulations out of personal decisions.
She voted against the 2002 Authorization for Use of Military Force and frequently speaks out against the war.
Kaptur is a holdout from the old, pre-Clinton Democratic Party, elected from what used to be a reliably populist-Democratic state, who served with Senators John Glenn and Howard Metzenbaum, in then always-blue Ohio.
[Full disclosure: I worked on Rep. Kaptur's campaign staff in 1990.]
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Dear Madame Speaker,
We are concerned about the Bailout Bill proposal submitted by the Administration. Some of us believe that the bill should be paid for by taxes on the top 1%, and/or should include transfer of equity interests in the bailed-out entities to the government. Some of us question whether a bill should be passed this week.
In any case, we believe the bill would be improved by the following:
1) Supervision. The Secretary of the Treasury shall not enter into any contract until it is approved by a bipartisan three-member Board. Before we pass the bill, Bush must unequivocally agree to appoint one person selected by the Speaker and one selected by the Senate Majority Leader to the three-member Board. Asset purchase agreements of less than $1 billion and service contracts providing for fees of less than $10 million are exempt from this requirement.
2) Phased Authorization. Congress should authorize only $200 billion now, while committing itself to pass additional authorizations in the future, as necessary, up to $700 billion. This would give Congress the ability to monitor and improve the program. Otherwise, once Bush gets the $700 billion, he will veto further Congressional fine-tuning.
3) Fast track for Regulatory & Corporate Governance Reform. Throughout the 111th Congress, the Speaker of the House of Representatives and the Majority Leader of the United States Senate, shall have the extraordinary powers to call up any bill dealing with corporate governance and/or financial services reform under the following rules: the bill shall be subject to limited debate, followed by an up or down vote. If the bill does not include this provision, next year Wall Street can hire 4100 lobbyists to persuade 41 senators to delay any reform bill until it is diluted.
4) US Investors Only. No mortgage-related asset shall be purchased under the bill unless it is established that such asset was owned on September 20th, 2008, by an entity headquartered in the United States. (We have no collective position on whether a U.S. entity should be disqualified because it is owned by a foreign parent.)
5) Obligation to invest in the United States. Any entity selling assets under this bill to the United States must agree to invest the proceeds of such sale in the United States for no less than five years.
6) Tough Standards on Executive Compensation. As to any entity (or affiliate thereof) selling assets to the Treasury, any executive compensation contract calling for compensation in excess of the amounts which are deductible under Internal Revenue Code Section 162(m) is hereby void as against public policy.
7) Homeowner’s States Rights Not Preempted. The federal government shall comply with all state and local laws which protect the homeowner, not withstanding any argument that the federal government is exempt [from] the reform.
Reports to Congress. The reports to Congress required by Section 4 of the Paulson Act shall be rendered every 2 weeks.
9) Minority and small business contractors; Buy American. At least 10% (in dollar volume) of the asset management contracts and advisor contracts must be small enough that a firm of 100 or fewer staff could perform the contract. Otherwise, minority and small business will be effectively excluded. In contracting with private entities for services regarding the acquisition and management of mortgage-related assets, the Secretary of the Treasury shall be bound by all applicable laws designed to benefit minority-owned businesses, women-owned businesses, and small businesses and shall be bound by all applicable “Buy American” provisions.
10) Review. Section 8 of Secretary Paulson’s proposal should be deleted. The actions by the Secretary shall be reviewable by administrative agencies and the courts, as provided by existing law.
11) Valuation. The Treasury shall not pay more for any asset than the asset’s fair market value.
We believe the bill should also include appropriate homeowner protection/bankruptcy reform, and appropriate economic stimulus.
Some of us also support a surtax on excessive compensation received by executives of bailed-out entities.
From: Representatives Brad Sherman, Peter DeFazio, Lloyd Doggett, Donna Edwards, Bob Filner, Rush Holt, Mike McIntyre, Bobby Scott, and Donna Christensen.
Where is your representative on this issue? Your Senator and Congressman are probably panicked. Time for them to hear from you!
Dear Friend,
The U.S. government has been turned into an engine that accelerates the wealth upwards into the hands of a few. The Wall Street bailout, the Iraq War, military spending, tax cuts to the rich, and a for-profit health care system are all about the acceleration of wealth upwards. And now, the American people are about to pay the price of the collapse of the $513 trillion Ponzi scheme of derivatives. Yes, that’s half a quadrillion dollars. Our first trillion dollar compression bandage will hardly stem the hemorrhaging of an unsustainable Ponzi scheme built on debt “de-leverages.”
Does anyone seriously think that our public and private debts of some $45 trillion will be paid? That the administration’s growth of the federal debt from $5.6 trillion to $9.8 trillion while borrowing another trillion dollars from Social Security has nothing to do with this? Does anyone not see that when we spend nearly $16,000 for every family of four in our society for the military each year that we are heading over the cliff?
This is a debt crisis, not a credit crisis. Just as FDR had to save capitalism after Wall Street excesses, we have to re-invigorate our economy with real – not imaginary – growth. It does not address the never-ending war on the middle class.
The same corporate interests that profited from the closing of U.S. factories, the movement of millions of jobs out of America, the off-shoring of profits, the out-sourcing of workers, the crushing of pension funds, the knocking down of wages, the cancellation of health care benefits, the sub-prime lending are now rushing to Washington to get money to protect themselves.
The double standard is stunning: their profits are their profits, but their losses are our losses.
This bailout will not bring real jobs back to America. It will not bring back jobs that make things. It does not rebuild our schools, streets, neighborhoods, parks or bridges. The major product of this financial economy is now debt. Industrial capitalism has been destroyed.
In the next few days I will push for a plan that includes equity for every American in any taxpayer investment in this so-called bail-out plan. Since the bailout will cost each and every American about $2,300, I have proposed the creation of a United States Mutual Trust Fund, which will take control of $700 billion in stock assets, convert those assets to shares, and distribute $2,300 worth of shares to new individual savings accounts in the name of each and every American.
I will also insist that all of the following issues be considered in whatever Congress passes:Reinstatement of the provisions of Glass-Steagall, which forbade speculation
Re-regulation of the finance, insurance, and real estate industries
Accountability on the part of those who took the companies down:
a) resignations of management
b) givebacks of executive compensation packages
c) limitations on executive compensation
d) admission by CEO’s of what went wrong and how, prior to any government bailout
Demands for transparencey
a) with respect to analyzing the transactions which took the companies down
b) with respect to Treasury’s dealings with the companies pre and post-bailout
An equity position for the taxpayers
a) some form of ownership of assets
Some credible formula for evaluating the price of the assets that the government is buying.
A sunset clause on the legislation
Full public disclosure by members of Congress of assets held, with possible conflicts put in blind trust.
A ban on political campaign contributions from officers of corporations receiving bailouts
A requirement that 2008 cycle candidates return political contributions to officers and representatives of corporations receiving bailouts
And, most importantly, some mechanism for direct assistance to homeowners saddled with unreasonable or unmanageable mortgages, as well as protection for renters who have lived up to their obligation but fall victim to financial tragedy when the property they live in undergoes foreclosure.These are just some thoughts on the run. You will hear more from me tomorrow.
Dennis J Kucinich
www.Kucinich.us
216-252-9000 877-933-6647
The 700 billion dollar bailout package that is likely to pass Congress this week is notable for several things. It is an unprecedented commitment of taxpayer revenue for a single purpose, it breaks hard with the governing free-market ideology that has dominated both parties for the past thirty years, and it grants unprecedented new powers to the executive branch of the federal government. In offering a New Deal in response to a similar economic crisis, a President of long-ago told us that fear was the only thing we had to fear. Today, fear is the only thing we’re offered as its used to pass The Bad Deal.
As Naomi Klein has brilliantly distilled in her landmark book The Shock Doctrine, the only consistent ideology of this administration and its Democratic enablers is the use of the shock produced by a crisis to force deeply unpopular economic changes in favor of powerful corporations upon a quietly compliant and frightened population. Written and passed within a week of the crisis, the bailout bill beats the six-week-turnaround of the hastily-passed and barely-read USA PATRIOT Act, another sweeping assertion of executive power rushed through in a crisis without discussion, analysis or (god forbid) debate. A very telling New York Times report entitled “Congressional Leaders Stunned by Warnings” noted that Administration officials laid the groundwork for this by presenting the threat to (or scaring the crap out of) key members of Congress. Glenn Greenwald notes the parallels between this process and the invasion of Iraq, in which respected members of Executive branch agencies, solely charged with the sober assessment of fact, have tailored information to fit their ultimate agenda in order to scare lawmakers into “bi-partisan” compliance.
Like Dick Cheney, who was the CEO of Halliburton before he came into the Administration and led us into a war that happened to be the best thing that ever happened to his company, so too will former Goldman Sachs CEO-turned-Treasury Secretary Henry Paulson oversee an intervention in the economy that his company will see great profit from. Like every other significant event of the past eight years, Bush is benched during the crisis, while all around him, in every department of the executive branch, titans of industry use the federal government to loot the treasury and re-write the law to immunize themselves.
The Democrats are so complicit in these economic problems they find themselves in a very difficult predicament so close to an election. Among the largest beneficiaries of Wall Street money in the House and Senate are Barney Frank and Christopher Dodd, chairmen of their respective Banking Committees. And Barack Obama’s support from that sector is greater than McCain’s. Nancy Pelosi and Harry Reid continue their Kabuki Theater of Objections to the Bush plan, while using their total control of the Congressional agenda to pass whatever Bush asks of them. This has left an odd opening for John McCain to grab the populist side of this issue. Although he changes positions more often than his toothbrush, he knows that if he frames a message simply and powerfully enough it doesn’t matter that he’s lying. “I’m Against this bailout” — and whether he votes for it or not (and he’ll probably skip it) that’s the message that gets across to the American workers who don’t understand economics any better or worse than McCain does, but know the bailout doesn’t pass the smell test.
What is in this bill? We will be finding out for months and years to come what it means. Will it bankrupt our treasury and force further cuts to social services, health and safety regulatory agencies, or prevent funding of a national health care program? Isn’t it shocking and unprecedented that a party of the far-right would nationalize private corporations? What sort of movement fueled by deeply nationalistic and religious fervor responds to an economic crisis by giving itself broad new powers and erasing the lines between government and corporate interests? I believe it’s called National Socialism. Ever heard of it?
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