Time for a Taxpayer Revolt

Time for a Taxpayer Revolt

The bailout package isn’t a compromise: it’s an appalling transfer of wealth upward. Register your protest!


Congress votes this week on the biggest giveaway 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 Street and Main Street, in reality it represents an appalling transfer of wealth upward.

While there’s a distinct possibility the plan will pass, we should oppose it both before and after it passes. Jobs with Justice is calling for a national day of action against the bailout on Wednesday. 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 were told by Congressional insiders 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. (For more information, go to bailoutmainstreet.com.)

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 thirty-year marriage to pay for this financial debacle.

The plan will be sold as fair to everyone and “the best deal” possible. Not true.

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.

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.

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 can, not 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.

And the provision to disburse the $700 billion in two installments is meaningless. Congress has just a fifteen-day window to vote to block the second payout, making it highly unlikely, and the next president can just veto the measure.

The bill’s slogan is “Reinvest, Reimburse and Reform,” which echoes the New Deal’s rallying cry of “Relief, Reform and Reconstruction.” But relief and rebuilding are nowhere to be seen.

Where are the Democrats and why did they drop every proposal for direct aid to homeowners on the brink? Why was there was no attempt to push for government intervention that could actually revive the economy: public works, national healthcare and alternative energy investments?

Provisions like limiting executive pay and canceling golden parachutes are tossed out like 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 canceling 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.

Democrats said a bill that addressed the needs of ordinary Americans instead of Wall Street investors was simply “not feasible.” Funny how Republicans never think that. A small minority of Republicans in the House nearly killed the bill because they maintained iron-willed ideological unity.

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 Twenty-First-Century New Deal that would stop spending our tax dollars on war and Wall Street, and help struggling homeowners and build affordable housing; fund job-creating projects for clean energy and rebuilding our infrastructure; and fund a universal healthcare 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 Twenty-First-Century New Deal. This is our best, last hope.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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