Most of the debate on the Wall Street bailout revolves around the strings attached to the torrent of cash, which is, according to economists, necessary to stabilize credit markets.
True to Bush administration form, the Paulson plan outrageously insists on a virtual blank check made out, essentially, to Paulson himself. The Congressional Democrats, also true to form, are timidly proposing sweetening the bitter pill by making some of the funds available to the millions currently losing their homes while at the same time placing limits on compensation packages available to CEOs who, if past performance is any guide, have no qualms about taking truckloads of government money and driving away to Aspen or Palm Springs.
What is missing from all of the discussion is any mention of how the plan will be payed for, as it is taken for granted that the average taxpayer is sure to be stuck with the ultimate cost of the $700 billion dollar price tag.
But we don’t need to pay. And in this case we should not. For very few Americans have benefited from the giant casino which Wall Street has become over the past generation.
Yes it has spun off enormous wealth but this has gone overwhelmingly to a small number at the top.
And it has been paved for by those at the bottom who have experienced now almost four decades of stagnant real wages, the evisceration of pension plans, degradation of public services and a constant threat of job loss due to corporate outsourcing.
All of these conditions are the result of policies that have been effectively lobbied for by Wall Street and, just as they have destroyed the lives of tens of millions of Americans, they have worked to produce a new class of what Franklin Roosevelt called economic royalists unprecedented in U.S. history.
It is time to make those who have danced their jigs on our backs pay the fiddler.
And that means that not one dime of the bailout should come from the 99.9% of Americans who are the victims of Wall Street. All of it should come from the enormous store of assets controlled by the upper 1%.
The way to do this is by instituting a Wealth Tax-a tax on accumulated assets above $10 million.
It will, of course, take an economist, or probably a team of economists, to calculate with precision the funds available, as most of these are in “intangible” form (investment vehicles such as bond, stock securities, etc). That said, it is obvious the total is by now almost unimaginably huge after a generation of disgracefully low marginal income tax rates, tax loopholes, high corporate profits and, most notably, stratospheric executive compensation.
Eight-figure salaries have been routine in investment banking firms for two decades with Henry Paulson himself having earned $35 million in 2005 on the road to socking away accumulated assets of more than $700 million (not including stock options). His Democratic Party counterpart and predecessor at Goldman Sachs, key Obama advisor Robert
Rubin, received similar compensation before moving to Citibank, where his wealth ballooned still further. Hedge fund operators, who have benefited from the absurd exemption on capital gains tax, have accumulated wealth beyond their dreams of avarice, one of them, John Paulson, of Paulson & Co. raking in a cool $3.7 billion for one years work.
These are just three of the inhabitants of what the Wall Street Journal reporter Robert Frank calls Richistan and are unusual only in that their names have appeared in the press. Most are anonymously sitting on huge piles of investment capital, dutifully passing on the totality of their fortunes to their offspring virtually untouched by inheritances taxes.
Simple arithmetic demonstrates that more than enough is available from these and other charter members of the plutocracy to fully finance the bailout, as well any additional items those with sufficiently resourceful minds would like to make part of the package.
Reasonable add-ons would include financing single payer health insurance, a renewable energy research and development, aid to states and localities suffering from withering infrastructure, particularly in depressed urban areas, publicly financed elections, etc.
Pushing for all of this, and more, should be the bottom line of progressives right now and we should be in the streets and in our representative offices demanding it.
Anything short of this is missing a once in a lifetime opportunity to return the country to fiscal and mental health after a three decades long episode of free market insanity.