xposted at election08.passtheroti.com
What would you say if someone asked you to borrow $2000 dollars or more and give it to Wall Street companies right now, and that if you waited more than a day, the world would end? That is what is happening to taxpayers in the United States- American citizens and otherwise. These are my thoughts in response, which you should note are shifting as events change rapidly and I get more educated on the politics of this. For example, drawing distinctions between "Is there a credit crisis?" and "Why is Congress in political crisis mode now as opposed to a year ago or a year from now" is important. I hadn't thought this through last week, because I wasn't aware that actually, to some extent, the Emperor Looked In The Mirror And Liked What He Saw, in addition to what I had previously written. In other words, despite that the bank collapses were a major warning economically, there is still strong cause for some skepticism about the politics of it all and the notion of "crisis" ;)
1. The bailout is the most important issue right now - in some ways it's more important than the election. There are two parts to the reasoning behind this:
a) The election is close to in the bag for Obama (1,2,3), assuming the credit crisis stays in the news and he doesn't f@#k things up and some other major disaster or war is started. Those are possibilities, but when North Carolina and Montana have gone back to being insecure for McCain, and Virginia is looking pro-Obama, it's close to endgame. Plus, if he's up in the polls around election day and, as expected, his turnout operations destroy McCain's, this makes this less of an issue.
b) What happens with the bailout is going to trap the next president one way or the other - whoever it is - to spending cuts, tax hikes, difficult and domestically unpopular negotiations with foreign countries and potentially warfare. In other words, no matter what you think Obama or McCain WOULD do, the financial bailout, if it happens, will make it impossible for them to do it. Particularly if the U.S. government comes close to defaulting on what will be an $11 trillion(!) debt or more. As a result this choice on what to do about the credit crisis is as important and will also play a strong role in influencing the actual election results (at minimum in terms of whether this stays in the news or not - the longer it does, the better for Obama). So even less Sarah Palin celebrity distractions and even more focus on this real issue, please. Yeah, she's wacky, but so are the Treasury Secretary and Phil Gramm and President Bush and John McCain- and they have a lot more power, apparently.
2.. The proposals that have been floated so far are inadequate for poor and working people and they're trying to push something through as rapidly as possible. The debate on this bailout for Wall Street brings into sharp relief what is increasingly evident - the Democrats are pro-market (ew), the Republicans are pro-small groups of their friends and will pursue policies that screw over everyone else (terrifying). **
A. I've been wondering for a long time what the final master stroke of the Bush Administration would be - I think this might be it, though they still have a couple months. The Bush Administration's proposal would be a joke if people weren't treating it as anything other than that. You have a President with about 45 days left in office who has tripled or quadrupled the size of US debt (that's trillions, friend), started several disastrous and/or unsuccessful wars, and resultingly has a 19% approval rating. In response, he has asked for $700 billion dollars with no oversight (it prohibits the courts from reviewing the government's actions!) for the government to buy dangerously bad assets from extremely wealthy firms.
The credit crisis is real, and systemic, but jokes like this are scary politically and economically laughable. They don't solve the root problem for anyone except financial capital- instead, it transfers it to the government / taxpayers and as such is wholly irresponsible. As Amy Goodman has pointed out, no one knows exactly how much bad debt the government would be taking on. If people knew the depth of the bad debt, then the market wouldn't be so worried in the first place - it's the uncertainty that's a huge part of the problem, because it makes investors and ordinary people react in fear, rather than on the basis of thinking and information.
B. Unfortunately, although the Democratic Dodd proposal is more "reasonable", it doesn't address some things. I haven't read it closely yet, so if you want to do me the favor of doing so, you can see the bill and commentary on it here at the public markup wiki site. When I looked at it, I noticed there wasn't enough emphasis on protecting working people, there's no emphasis on poor or working class people internationally (maybe that's better - the U.S. doesn't do very well when it starts interacting with those people), it has some stuff about regulating CEO compensation (which is largely symbolic and for political points in my opinion), I didn't see any information about strong disclosure requirements about exactly what the government is taking on. Mostly, though I don't think it has nearly enough broad measures like repealing the Bush tax cuts. There are many ways to pay for something like this, and the Dodd option - taking on shares of the companies so that price rises in the mortgage or the companies would yield to taxpayers - seems like half a loaf to me. Not a good starting out point for negotiations, in other words, and that's what we need (though I still fail to see the reason to negotiate with Bush - he's done - let him take the blame for vetoing a bill for once - let's see if he has the chutzpah while saying "9/11 9/11 9/11").
3. Some other proposals, which haven't taken the form of the bill and aren't being Seriously Considered - until you make them do it:
The closest I have seen to one from an American politician is Senator Bernie Sander's, which includes a 10% income tax for people earning over $500,000 and couples over $1,000,000 over the next 5 years, increased regulation of markets, etc. Read it here, and sign a petition on his website for it here. PLEASE! This is important! And yes, no mention of international victims - but it does at least reference briefly that in the U.S. there are a lot of people who are marginal and will become homeless and possibly die if a real solution to the broader problem isn't developed.
However there are other proposals being floated as well and these might start to get consideration or have elements of them work their way in if we force Congress to SLOW DOWN. The New York Times had an excellent summary of the different options floated (h/t to ravi) - I would look at the following:
A number of critics say the bailout plan pays too little attention to homeowners and to “Main Street.” Dean Baker recommended that the bailout should give priority to keeping people in their homes — i.e., reducing the amount of money people owe on their mortgages — instead of maximizing the returns the government can get from mortgage payments. Nouriel Roubini suggested creating a government body in charge of helping Americans find debt relief, modeled on the Home Owners’ Loan Corporation established during the Great Depression. Mark Thoma proposed the creation of a “worker bailout fund” for those afflicted by layoffs nationwide.
4. So what can you do, now that you have a chance to actually make an effect?
None of this should be surprising given the state of both political parties in the U.S., the fear of Democrats to stand up to authority on behalf of workers (thanks B. Clinton), and the trend over the last 8 years in terms of legislation and approval by Congress. What is a little more surprising and great is the amount of outrage and resistance that this issue has received. This is perhaps because of the gravity of the situation and how close it hits home - as opposed to the Iraq War, the Patriot Act, and other issues that were a bit more abstract, at least in theory. TAKE PART IN IT.
* CALL YOUR CONGRESSPEOPLE. Or if you're not a constituent, call ANY CONGRESSPEOPLE YOU WANT. Here are your Senators and here are your House members. A) Tell them to extend the Congressional session if they have to, because you don't deal with issues like this overnight - we've seen what happens when we do that. That a bill shouldn't be passed in a hurry - urgency is the enemy of a real solution that will address the broad problem in a balanced way and IS NOT HELPFUL and was constructed by the Bush Administration; B) Tell them to create a bill in Congress from scratch instead of paying attention to what a Lame Duck president with a 19% approval rating and crazy ideas is saying - IT'S WITHIN THEIR RIGHTS and IN OUR INTERESTS; C) Tell them the bill needs to support working class people in a REAL way - that people need to be kept in their homes (not investors that bought homes to trade them up, but real people who might become homeless) that people with credit card debt need to be assisted, that unions need stronger support so that there's political pressure for better solutions, that they need to talk to people in the Global South to understand the repercussions of this $hit elsewhere over the past 20 years; and D) tell them that the bill needs to pay for itself - taking on more debt is unfair to those of us who are going to have to live another 30 years and pay for this $hit and that it's easy too - reverse the tax cuts for the wealthy that have been passed over the last 8 years, tax the make the CEOs of the companies that participate in these programmes pay a fine, support the Sanders surtax on income for really rich people, end the war in Iraq in a responsible way, continue to look for other solutions besides government intervention for this problem, and tell them that it's unacceptable that the powerful in the US refuse to take responsibility for creating a disaster that affects poor people in the U.S. and even more so in other parts of the world. E) Tell them you know a lot of other people who feel the same way, and you're not going to [insert threats here - not vote for them, not vote for anyone who doesn't support this stuff - not pay taxes, etc. - just don't get yourself arrested].
Moreover, be angry - usually people tell other people to be polite when they call Presidential offices, but even people heavily invested in electoral politics are telling us to literally yell at our Congresspeople now. And I like it :) Because the anger is warranted, and has been for a long time. If we had collectively mustered this much outrage when the Iraq War was happening, when the Bush tax cuts were happening, when the financial deregulation was happening, when the Patriot Act was happening, when Hurricane Katrina was approaching New Orleans, when the plans for afterwards were being formulated - well we would be better off today. But THIS IS THEIR FAULT.
* Again, SIGN THE SANDERS PETITION.
* And keep up with day to day events and news at Open Left - especially check out the quick hits on the side which have links to important developments and perspectives that haven't necessarily been heard, but all of the diarists are writing good stuff right now.
5. In conclusion, the urgency is false but real - they've made it and now we have to fight back against it. The crisis is real but false - there is a problem in the global financial markets, but it has to be addressed in a broad context as well as a narrow one - and this is the time to do it. Bush has no power and should be called out for it. And Congress needs to step up - particularly the Democratic Congresspeople who aren't yet doing their job to the extent that they need to and haven't for 8 years.
In other words, you need to DO something, NOW, to keep them from doing something terrible now for no reason other than what the Bush Administration wants.
* If you want more background, read Shock Doctrine by Naomi Klein. I haven't read the book, but here's the wiki entry. Many commenters at Open Left have referenced it and perhaps with good reason. The strategy here - wait for enormous crisis to build up and then try to get through ideological reforms when you decide or create or wait for it to explode- has been used over and over. You can see it in the Patriot Act; you can see it in India's liberalization "reforms" in 1991 which were able to go through at a centre-level because they ran out of foreign currency, more or less, and took an IMF loan. Take a look, for example, at Vanita Shastri "The Politics of Economic LIberalization", 1997, Contemporary South Asia (6:1), pp 27-56 on the amount of time, energy, and power that went into creating the liberalization policies before they were finally implemented.