It is crystal clear who Washington represents, and what the American people can expect from the next administration and Congress -- more of the same, rhetoric and excuses.
But the needs of the American people can't wait another four years. States and local governments must do the job Washington will not. New leaders and new ideas are urgently needed. One such idea is public banking.
A public bank, such as the hugely successful Bank of North Dakota (BND), is capitalized with public funds, has one shareholder - the people -- pays no outrageous compensation for managers and offers no incentive to gamble.
A public bank partners with community banks, credit unions, other local financial institutions and municipal governments to provide the sustainable and affordable credit which is essential to support locally directed economic development, restore vital public services and create jobs.
Wall Street hates the idea, fearing the loss of trillions of dollars of state and municipal deposits, and the huge fees they reap for providing cash management, payroll and other services which states and municipalities could provide internally and at far lower cost -- if they owned their own bank.
The parasites-in-pin-stripes argue, "But your state is broke. Where will you get the money to capitalize a bank?"
But are the states broke? An examination of the finances of U.S. states and municipalities turns up an astonishing fact. They keep two sets of books.
The one that gets all the attention is used for operating budgets, and generally paints a picture of state and municipal budgets stretched to the limit. But the other set of books, required by law and called the Consolidated Annual Financial Report (CAFR), indicates that there is public money stashed all over the place. Nationally, it amounts to trillions of dollars.
California, with its giant economy reports more than $600 billion in these "off budget" funds. In Pennsylvania, the total is about $91 billion -- not exactly small change -- and it can be found in the state's 2011 CAFR in three categories.
Proprietary Funds, generated when a government charges customers for the services it provides.
Fiduciary Funds, in which the state acts as a trustee to hold resources for the benefit of others, such as pensions; and
Component Units, which are legally separated organizations for which the government is financially accountable, and the revenue is derived from assessments, fines, penalties, licenses, etc.
If only twenty percent of these funds were used to capitalize a bank and were leveraged at a conservative ratio of 8 to 1, Pennsylvania could inject more than $145 billion into its economy, creating an economic revival on a scale never before seen.
Wall Street responds to this prospect with scare tactics. "You mean put twenty percent of our pensions at risk?"
To which proponents rightly respond, "No, we mean get those pension funds under better and more productive management."
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