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 four part plan to accomplish that goal which includes a five-year, 10 percent 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 That deregulation needs to be repealed.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 don't 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.
As I see it, we have work set out for us on two fronts. Most important is that we all inform our elected representatives, not only in the Senate but also the House (for me, that's Pelosi … whoopee!), that we have read Sanders' proposal and do not want to see it "pass unnoticed." At the same time those of us supporting Barack Obama should inform him of the importance that he let the electorate know that he has given serious consideration to the proposals of both Paulson and Sanders and that he believes that the significance of the crisis at hand demands serious debate of the merits of both proposals. Furthermore, Senator Obama should substantiate his position by participating in that debate in the Senate. If his opponent decides to keep campaigning while he is seeing to the people's business, that could easily trigger a response in Obama's favor.
Dickinson reduced his own interpretation of the Paulson proposal to the simplest of terms:
We. Are. So. Screwed.
The only way Dickinson can be refuted is by the Congress coming up with a better plan and sending it to the White House. Sanders has taken a serious step in that direction. It is up to us to make sure that he does not get swept under the carpet (where all he will find is consolation from Dennis Kucinich, who is used to being there)!