Dennis Kucinich often said on the campaign trail that if we did not end the war in Iraq and stop spending billions of dollars a month there, we would not be able to address domestic priorities such as health care, education, poverty and environmental protection.
I ask all progressives who oppose the Financial Bailout/Rescue package, why is this situation any different?
If we do nothing and the economy falls further into recession (a very plausible scenario given current data), then an Obama Administration would not be able to enact much progressive legislation as all of the government's energies would have to put to dealing with an even more severe economic crisis.
Obama would have no political capital to do anything except to prop up a failing economy. You can forget about health care reform, energy independence or anything else on a progressive's wish list.
What I found baffling in yesterday's vote is that many liberal Democrats from my state of CA voted against the bill, when the bill would do more to address the issues of the real estate crisis than any other measure proposed by Congress to date. California is ground zero for this crisis. Millions of homeowners in California are under tremendous pressure because home prices here are overinflated and people resorted to speculative mortgages in order to afford a home. In West Los Angeles, a 2 bedroom condo that cost $480k in 2000 cost over $1 million by 2006. The percentage increase in poorer parts of LA is even higher. Even those who have money were forced to enter into floating adjustable rate (and subprime) mortgages to keep pace with rising home prices. These failed mortgages here have value if the government can hold them long enough for the economy and bank accounts to recover, and for home values to reduce to sane levels.
Reading the roll call convinced me that most liberal members of Congress are not focused on the details of the bill, but rather are reacting to the politics of it. A lot of their anxiety is understandable: No one trusts Bush; everyone hated the original blank check bill; it's a lot of money; there is the perception that this money is to bail out Wall St instead of Main St.; and the GOP is trying to play games with the package to position themselves away from Bush for the general election (too late for that I think).
However, I do expect all progressives to actually read the legislation. If they did, they would understand that most of the 110 pages are devoted to addressing issues that Democrats care about: oversight, no goodies for CEOs, mortgagage protection; and taxpayer protection.
This legislation is not just a necessary prerequisite for Obama to have any leverage as President to accomplish anything. I would argue that it represents the dawning of a progressive era. This document is all about hands-on government management of the financial markets with a particular focus on real estate. The restrictions on CEO pay are unprecedented. The oversight is real. The Treasury is now given a role in management of mortgages, which means that the government can rewrite the terms of any mortgage it owns, a power which will be used by an Obama Adminsitration to keep people in their homes.
This bill ends laissez-faire capitalism. It ends the Reagan Revolution. It ends the days of government as the enemy. We should be jumping at the chance to pass this now, and then make suggested improvements after the election and/or when the new, more progresive leaning Congress takes power.
Here are a few areas that stand out to me. I would encourage everyone to read this document or a summary.
- Title I, Section 101 TARP - The bill creates a Troubled Assets Relief Program (TARP). This program authorizes the treasury to establish an Office of Financial Stability to purchase mortgages and issue regulations. This is no bailout. This is an investment with strings attached. There are no direct payouts or subsidies to corporations. We're purchasing assets. The government's purchase price will likely be lower than the resale price if we hold them long enough.
- Sec. 104, Financial Stability Oversight Board - There are at least 3 layers of oversight in the Bill. One is this Board (comprised of the Fed chair, SEC Chair, HUD Sec, Director of the Federal Home Finance Agency and the Treasury Secretary). Another is Congress. A third is the courts. That's a lot of oversight that I think an Obama Administration would take full advantage of.
- Sec. 109, Foreclosure Mitigation Efforts/Sec. 110, Assistance to Homeowners - The treasury is authorized to implement plans to assist homeowners for mortgages purchased by the government, including the use of the Hope for Homeowners Program, and modification of loan terms. If the government owns the mortgage, it can modify the terms to protect the homeowners. Think of an Obama Administration implemneting that one. That would be a government that fights for you.
- Sec. 111 - Executive Compensation and Corporate Governance.
If a company participates in the program and asks for assistance from the government, then those companies will face restrictions on CEO pay. These restrictions include: eliminating incentives for high risk taking; elimination of golden parachutes (current payments or future contracts); recovery of bosues or incentive payments if earnings/gains statements turn out to be inaccurate.
There is a lot more, but these clauses move things in the right direction.
This bill represents a great opportunity for the Democrats to save the economy and launch a new progressive era. With the public blaming the Republicans for the defeat of the bill and for the state of the economy, the Democrats are poised to gain. Pass the bill.
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