[The following is a message I sent today to my Congress critters. I urge everyone to contact your Congress critters without delay.]
Secretary Paulson's proposed bailout bill is totally unacceptable, and I strongly urge your opposition to anything like it. Corporate welfare is an insult to the American people.
This is notably unlike the rescue efforts undertaken so far. In those efforts, the Federal government actually took control of the companies. We got something in return for our money. The current effort seems designed by Secretary Paulson to provide funds to companies that operated irresponsibly without imposing any control or obligations on them at all. The U.S. will get the bad mortgages, but Paulson stated in a teleconference with Congressional leaders that he intended to pay more than their market value. That excess is pure corporate welfare. It is also rewarding bad behavior.
Secretary Paulson is asking for approval to spend $0.7 trillion of taxpayer money with him having total control, and no real limits on how he can expend the funds. And he has no proposal for financing the cost. Increasing the national debt is not an answer. It has to be paid some time, but how is totally absent from what Paulson has proposed.
If any sort of rescue is approved for those corporations that generally quite knowingly involved themselves in making bad loans, there must be a number of conditions to ensure protection of ordinary Americans and to ameliorate rewarding of irresponsible corporate behavior.
- If any funds are provided in excess of actual market value of mortgages and securities obtained, the corporations must be put under some form of Federal control. Anything in excess of value is an investment in the corporation, and the normal rule that investments bring ownership rights must be followed.
- Those executives involved in making corporate decisions which were clearly irresponsible should have their employment terminated with no severance and no bonuses. There should be a lifetime prohibition on them working for any company helped by the Federal program.
- Executives of aided corporations should have a ceiling on total compensation equal to the compensation of members of the SES in the Federal sector.
- The costs of the program should be financed by increases in taxes on corporations and wealthy individuals. The national debt is largely held by wealthy corporations and individuals at home and abroad. As such, it functions as a wealth redistribution scheme transferring wealth from the poor and middle class to the wealthy, many of them foreign. The program needs to be fully financed through a specific taxation program, rather than being a burden on lower and middle class people in future generations.
- Giving total control of such a mammoth sum of money to one individual with strong corporate ties would represent an unprecedented power grab. There should be an oversight board with real powers with broad representation. The majority of members should be people without any significant ties to the corporate sector. We must not put the fox in charge of guarding the hen house.
- There should be a lifetime ban on Secretary Paulson being employed by or having investments in financial sectors aided under the program. Incentives to give corporate welfare in hopes of future personal gain must be limited to the maximum extent possible.
Congressional consideration of this bailout proposal will be an acid test of whether there really is any meaningful difference in the two parties. Will the Democrats stand up for the people, or will they show loyalty instead to the corporate class? As a Democrat, I ask you to stand with the people who, based on the Washington Post's interview of numerous ordinary folks, overwhelmingly oppose anything like the Paulson proposal. I ask you to stand against any legislation that does not have the kind of safeguards I have outlined.
