By Medea Benjamin and Arun Gupta
Congress will be voting this week on the biggest give-away of our tax dollars to the financial sector in our nation’s history. Despite attempts by legislators to portray this as a compromise bill that helps both Wall St. and Main St., in reality it represents an appalling transfer of wealth upward.
While there’s a distinct possibility the plan will pass this week, we should oppose it both before and after it passes. Jobs with Justice is calling for a national day of action against the bailout this Wednesday, Oct. 1. In conjunction with this, we are calling for actions against Congress on the same day. Building on the wave of protests against the Wall Street bailout last week, we must put Congress on notice that they pass this bill at their own risk.
We have the momentum: Congressional insiders told us that last week’s protests slowed down the rush to pass this horrendous bill. Another day of widespread national protest could kill it off and open space for a much more sensible plan.
With just weeks left until the election, it’s also the perfect chance to tell Congress they’ll be facing a taxpayer revolt if they vote for the bailout. Look for the closest office of your Congressperson or Senator. Organize your family, friends, group, whomever to do a picket, hand out literature, flood the office with phone calls – whatever. The imperative is to act now.
Despite talk of a crisis being averted, many are skeptical as to whether the bailout will even restore confidence – and credit – to the banking system. As one report notes, “Doubts remain as to how it could immediately thaw the frozen money and credit market.”
Even if the bailout somehow revives the banking sector, few economists think it will jumpstart the consumer credit machine. For one, over-leveraged, money-strapped banks will eagerly dump near-worthless securities on taxpayers for cash to bulk up their reserves. Plus, with working hours and wages declining, unemployment, home foreclosures and inflation surging, banks are in no mood to give consumers more credit, so consumption – and hence the economy – will continue to contract.
This is why the bill is a scam. For all the talk of transparency in the bailout, there has been zero transparency in the political process. We weren’t allowed to see any details of the bailout other than the government will go on a shopping binge of buying toxic mortgage-backed securities.
Our elected officials – who work for us – are trying to hide the fact that the fix is in. They are planning a shotgun wedding by slathering makeup on a rotting corpse, dumping it at the altar and hoping taxpayers don’t catch on before we’re trapped in a 30-year marriage to pay for this financial debacle.
The plan will be sold as fair to everyone and “the best deal” possible. Bullshit.
First, the cost is being minimized. The Wall Street Journal cheerily reports that in the worst-case scenario, the annual cost would be a measly $42 billion in interest and principal. (http://online.wsj.com/article/SB122245659564179649.html)
A new study of banking crises around the world, however, puts the average cost at 16 percent of a country’s gross domestic product, which would amount to more than $2 trillion here. That’s more than $10,000 of future income for every single adult in the United States. http://www.economist.com/finance/displaystory.cfm?story_id=12305746
Everything else in the proposed bill is window dressing. Language in the draft states “The government can use its power … to help reduce the 2 million projected foreclosures in the next year.” That’s a “can”, not a “will”. Other measures for housing relief amount to tax breaks – so the banks get socialism, while the rest of us get to eat conservative orthodoxy.
Similarly, there are waffling words like “Meaningful judicial review of the Treasury Secretary’s action.” Does anyone believe that a Republican administration of the present or future would subject itself to “meaningful” review?
In terms of equity stakes, it’s limited to “opportunities” for ownership stakes and profit making in companies seeking a bailout. In all likelihood, this will amount to pennies of equity for each bailout dollar in a few companies.
There’s a measure to ensure taxpayers recoup any losses, but it waits for five years and then only commits a future president to introducing a plan, making it another fig leaf. And the provision to disburse the $700 billion in two installments is meaningless. Congress has just a 15-day window to vote to block the second payout, making it highly unlikely, and the next president can just veto the measure. http://online.wsj.com/article/SB122260585791683335.html?mod=article-outset-box
The bill’s slogan is “Reinvest, Reimburse and Reform,” which echoes the New Deal’s rallying cry of “Relief, Reform and Reconstruction.” But deliberately eliminated is any relief and any rebuilding.
Is it any surprise that the Democratic leadership caved in on every proposal for direct aid to homeowners on the brink? And there was no attempt to push for the type of government intervention that could actually revive the economy: public works, national healthcare and alternative energy investments.
Provisions like limiting executive pay and cancelling golden parachutes are tossing out bones. Does it make any difference if some Wall Street billionaire can’t buy a new Gulf Stream jet or a new manor in Tuscany? What would make a difference is cancelling the Bush tax cuts, closing corporate tax loopholes, resurrecting the estate tax and ending the Iraq and Afghanistan wars. Let the super-rich pick up the tab for once.
The Democrats said a bill that addressed the needs of ordinary Americans instead of Wall St. investors was simply “not feasible.” Funny how the Republicans never think that. A small minority of Republicans in the House nearly killed the bill because they maintained iron-willed ideological unity. Of course it’s too much to expect a spineless Democratic leadership to do the same.
That’s where we come in. The free markets are completely discredited, and it’s almost certain that other economic crises are lurking down the road. Paradoxically, this means there is significant political space to build a broad consensus for a 21st-Century New Deal that would stop spending our tax dollars on war and Wall Street, and instead help struggling homeowners and build affordable housing; fund job creating projects for clean energy and rebuilding our infrastructure; and fund a universal health-care system that would help American families, while cutting the nation’s long-term healthcare costs.
It’s time to for a taxpayers revolt against this mind-boggling Wall St. bailout. It’s time to build a broad coalition to demand a 21st Century New Deal. This is our best, last hope.
Medea Benjamin is the co-founder of CODEPINK, founding director of Global Exchange and has been active in human rights and social justice struggles around the world for more than 20 years.
Arun Gupta is an editor of The Indypendent and wrote the email that inspired the day of national protest against the bailout plan for Wall Street.
September 29th, 2008 at 9:46 pm
Do you remember JFK Kennedy’s Executive Order to rescue us from the illegal so-called (non federal) Federal Reserve Bank owned by private investors to which the federal government pays interest to? Gosh! Where are our intellects? I never graduated HS but got a GED in my thirties. Why hasn’t someone brought up this issue? Where is the gold or sliver to back the US dollars? Why should we pay interest to private owned enterprises when they are not even legal to print money– the federal reserve banks? I will follow this up soon with links to JFK’s executive orders which would have restored Congresses constitutional mandate to be the only printers of US currency unless someone prints the links before me. I never protested paying taxes and seldom filed out of disgust for the blatant injustices of the withholding system that feed the federal reserve bank. Yes! It is time for a tax rebellion. This is now the time for those of us with courage to stand up and resist what is being rammed down our throats as the only solution. New Deal as envisioned by FDR is a fair deal….. SpanishHarlem1938 / FreedomNow1938 one and the same…. /nm
September 29th, 2008 at 10:21 pm
It is so typical of those . . .uh . . responsible . . hack . . . ahem– for the current administration to title this bill so closely to the original. It’s been said so many times, but I sense the spirit of Orwell, and he certain that this whole thing is doubleplusungood. Hooray for those Republicans and Democrats who stood up in the face of this treacherous, disingenuous load of crap they had the audacity to even bring up for a vote, and they did it using fear, fear, and more fear. Unfortunately, the things they used to generate fear WOULD NOT BE SOLVED BY THEIR PLAN! UGH!
September 30th, 2008 at 3:12 am
http://www.john-f-kennedy.net/executiveorder11110.htm — President John F.Kennedy, The Federal Reserve And Executive Order 11110 — If our financial house is to be put in order, we must sit all things right. A bailout must bring a New Deal such as FDR initiated or better. This time the Republicans delivered a just blow, but what will the next round render us. This is the link I promised in my comment above. I sign this one as FreedomNow1938…
September 30th, 2008 at 7:25 am
The executive order signed by President John Fitzgerald Kennedy can be found at http://www.john-f-kennedy.net/executiveorder11110.htm and according to all I have seen on it, has never been removed from the books.
September 30th, 2008 at 11:16 am
Dear Sirs,
Quite explicit! If it helps, in Argentina, there was a similar case in 2001. The soybeans prices plumeted, taxes failed, and gov debt coudn’t be paid.
There were three possible solutions for paying the party: the gov paid (that means: bureaucrats have to reduce their incomes adn gov expenditures), the banks went bankrupt for their bad investments, or taxpayers paid. What happened? Politicians and bankers colluded, the tab went to the people, the peso and the gross product crashed.
Don’t make the same mistake! As your politicians to respect their represented. Fight for it! Read about Argentina 2001 and don’t let politicians destroy your future.
Iris
September 30th, 2008 at 11:19 am
Sorry! Ask your politicians …
September 30th, 2008 at 4:12 pm
Copied from Pam Martens article today in w.w.w.counterpunch.com
But the most duplicitous and frightening aspect of the plan, as always, was to found, buried in the back of the document, located there in the hopes everyone would have fallen asleep from the legalese before they made it that far. There’s the innocuous sounding Section 128, which was in both the original and amended versions, and says simply:
“Section 203 of the Financial Services Regulatory Relief Act of 2006 (12 U.S.C. 461 note) is amended by striking ‘October 1, 2011’ and inserting ‘October 1, 2008.’”
What would this effectively do? It was intended to speed up the enactment of this section of the law from 2011 to this week.
And what is the impact of the change in this law? (Take a moment to let this sink in.) This wonderful bipartisan bailout proposal, negotiated into the wee hours of the morning by sleep-deprived members of Congress was designed to come with a furtive Trojan Horse embedded by Wall Street lawyers. Banks already in trouble for lack of capital would get to hold as little as “zero” capital for transactions.
October 1st, 2008 at 1:26 pm
Two words…SIGNING STATEMENTS. Has everyone forgotten that George Bush has essentially nullified or perverted dozens of significant pieces of federal legislation by issuing signing statements that allow him to ignore the very laws that have just been passed by Congress??!?!? “…Bush has repeatedly asserted that the Constitution gives him the right to ignore numerous sections of the bills — sometimes including provisions that were the subject of negotiations with Congress in order to get lawmakers to pass the bill. He has appended such statements to more than one of every 10 bills he has signed…” (Charlie Savage, Boston Globe, 4/2006). It frankly matters not WHAT supposed provisions for oversight, or repayment, or WHATEVER are put into this bill…because after he signs the Bill he will amend his signature with just such a statement of absolute authority. He just has to go to Congress to get his hands on the $$$.
Congress, Don’t do it! Don’t agree to this bailout plan…please!!! It is yet another moment in which the current administration has used the disarming and infantilizing power of “shock” to get folks like you to follow along blindly, like little kids. Do you know anything about Milton Freidman??? “…Friedman refers to (policies) that are enacted during times of widespread social duress, allowing political groups to initiate what would otherwise be unpopular policies…” The Congress has already allowed Bush to invade Afghanistan and Iraq, threaten Iran, put anti-nuke missile systems in Poland, create laws that allow incarceration without due process (Military Commissions Act), fire Federal judges because they’re liberal, refuse grand jury subpoenas on the basis of executive privelege…c’mon!! Wake up!!!
October 2nd, 2008 at 12:46 am
We do need a revolt. The question is what can we do that will have any effect on the system? Joel Hirschhorn’s book Delusional Democracy outlines the basic problem. Our two-party state does the bidding of the real power in our society. It looks like a democracy–sort of, but both parties do the bidding of corporate interests. If we want to run up the flag of revolt, the clearest action we can take is to vote. Only this time we need to vote for candidates and parties that have not betrayed our trust. We need to send a strong message that the stranglehold by the Democrat and Republican servants of power can be defeated. Think of the message that 20% of the electorate would send if they voted for the 3rd party candidate of their choosing? This could be a fairly simple campaign to start, because it has a clear message and a simple action to follow. Think about it.
Check out Joel’s web site: http://www.delusionaldemocracy.com/
October 2nd, 2008 at 12:57 am
STOP THE PROPOSED BAILOUT LEGISLATION
Please consider the following alternatives
I truly hope you will stand your ground and continue to work toward a real solution.
I agree something must be done however the proposed legislation will not fix anything. “Trickle down” simply does not work. The problem needs to be fixed from the bottom up rather than top down.
1) The federal government needs to prevent future foreclosures by partnering with all mortgage borrowers in or about to be in foreclosure on their principle dwelling by extending a low interest (2-3%) loan for an amount equal to the difference between their current mortgage balance and the current market value. The benefits of this approach are:
a. This eliminates the need for foreclosure.
b. Allows the mortgage holder to continue to receive their payments on a smaller loan amount.
c. And it makes mortgage funds for additional lending.
d. It stimulates purchases and sales which will cause home values to rise back to a normal level.
e. Eliminates the need for creative, junk loans.
f. Secures the $700B investment with tangible property rather than valueless paper.
2) As far as Wall Street is concerned, the federal government simply needs to insure 401k and other retirement investments up to $100k just like banks and tack on a small rescue tax upon cashing in of those investments.
3) My feeling that any company that has to regularly borrow money in order to pay its employees deserves to go out of business. Let them fail. NO BAILOUT. We need to toughen up and swallow the pill. Instead, increase and extend employment benefits to the workers who become victims of their companies failure.
4) Eliminate or at least suspend the Self-Employment tax on small businesses, and extend low interest business loans for new or struggling businesses hurt by the economic failure.
5) Establish appropriate infrastructure and regulatory oversight organizations to manage these programs.
6) Increase Social Security benefits for those seniors who have no other source of income.
Thanks for listening, now get to work!
October 3rd, 2008 at 11:33 pm
YES, We need to mobilize a nationwide tax rebellion! Where’s the website? Imagine if your company’s payroll person was persuaded to … make a little error in processing such that no fed taxes were withheld (& paid to you). Now imagine this same event happening simultaneously thousands of time, nationwide? After several weeks, what would the Feds do? Would they get the message?
October 11th, 2008 at 4:41 pm
A comment on the “Bush McCain Meltdown”:
I support a tax payer revolt of the bail out, but think you should get your facts straight about where to assign the blame for the melt down. Bill Clinton and many democrats have just as much dirt on their hands as the republican dynasties.
October 23rd, 2008 at 8:47 pm
I agree with spanish. The best thing you can do for your country in my opinion is to create a grass roots movement very quickly and get those hard questions posed to your candadites before the election that surround the implicztions of executive order 11,110. JFK probably paid for it with his life, so you Americans should wake up and take up his torch.
Specifically, you need a president that will utilize order 11,110 to create the original ‘greenbacks’ again. They are called A United States Note that was in circulation along with the Federal Reserve note. The difference is that the United States Note was backed by something of intrinsic value: Silver. It also began it’s life as a credit, not a debit such as the Federal Reserve Note does; meaning the US treasury that issues it does not have to pay interest to the Federal Reserve System for creating the money, thereofre it can pay the countries debt down faster and eventually completely.
On the other hand,the Federal Reserve Note is born as a debit, because the U.S. Treasury has to pay interest on the note from it’s inception. Which means you never stop paying. Sort of like paying the minimum on a credit card.
Speaking of credit cards and electronic payments. You’d better stop. It is a means of keeping the ‘real’ greenback from returning, because transactions are based on the Federal Researve Note!
Go back to paying for EVERYTHING with CA$H. and change the cash to UNITED STATES NOTES backed by silver. That’s the only way you will beat them at thier own game. ( I dare not mention who “they” are)
October 24th, 2008 at 12:41 am
What do you mean when you say “21st century New Deal?”
Socialism isn’t the answer, either. The Keynesian mix of socialism and crony capitalism is the root of our problem. Free market economics are the only way to fix this, but that’s not going to happen. Hyperinflation will be a reality soon.
That’s how every empire falls, and that’s what the Fed is doing as we speak. You can’t create wealth with a printing press. When the dollar falls, it will wipe out the middle class, and it’s not going to survive this.
It’s hard to justify paying taxes at a time like this.
November 11th, 2008 at 1:25 pm
NO MATTER HOW YOU SLICE IT IT IS ALL WHITEWASH. USING TAX MONEY TO BAIL ANYONE OR ANYTHING IS THE BIGGEST SCAM IN THE WORLD.
GET READY FOLKS “THE FINAL HAMMER IS ABOUT TO COME DOWN ON ALL OF MANKIND!”
IT’S HIS TURN FOR TRUE JUSTICE WHICH IS LONG OVER DUE! HE IS BEGINNING TO HIT ALL WHERE IT HURTS THE MOST IN THE POCKET AND MORE… IT’S TOO BAD YOU ALL DIDNT PAY ATTENTION TO HIM AND LOOKED TO “HIM” LEAD & FEAR INSTEAD YOU CHOSEN MEN TO BE YOUR LEADERS! HOW SAD
November 13th, 2008 at 8:19 pm
Dear Sir or Madam,
I have been wondering about the fairness of banks renegotiating mortgage loans with folks who do not pay their mortgage, but not with all of us who faithfully pay our mortgage obligations. This seems to be discrimination. do you know of anyone who is organizing a class action suit to force banks to treat everyone equally?
Respectfully,
Chuck Wall