by Mary Curtis
The two Presidential candidates are supposed to be the declared “leaders” of their respective parties but, that having been said, neither has demonstrated leadership skill when it comes to dealing with their own party members in the past few days. This lack of leadership appears to be much worse for McCain who gambled on being the Hero of the Bailout Crisis and lost big time in both the polls and with his own party members in the Congress.
But both Obama and McCain are now probably scratching their heads wondering what will come next in the strange politics evolving over this financial bailout mess. While both campaigns expected passage of the massive billion dollar rescue program…each having already prepared celebratory ads taking credit for its passage…the bill’s failure in the House gave each candidate a reality check and wake up call that the American people are speaking with a very loud voice this year.
In what MSNBC’s Rachel Maddow describes as “cats barking and dogs purring” the Democratic Party (and Obama) seem to be trying to, at least, work toward a more unified image than the “leaderless” Republicans, according to Maddow. Even though Obama appears to be supporting Congress’ taking action on the financial crisis, he is also aligning himself with those Democrats opposed by meeting them on common grounds of protecting the average American against a handout to Wall Street greed and irresponsibility. Obama, unlike McCain, has indicated that the only way he would support a rescue program was if it protects the American taxpayers and homeowners as well as having oversight rather than the tsar-like powers for the Secretary of the Treasury in the current bill (see Section 8 of bailout text which gives full authority to the Secretary without review by the Courts or any other authority).
With that in mind, Representative Dennis Kucinich (D-Ohio) may have a plan that can bring everyone together…including those Republicans who broke with the Administration and their party’s candidate to oppose the current “bailout” legislation.
Kucinich was one of 95 Democrats (of 235 Democrats) who opposed the $700 billion bailout bill thereby breaking with Speaker Nancy Pelosi (D-California) and accounting for a full 40% of House Democrats. In an e-mail sent out by Kucinich, he describes his and the other Representatives’ reasons for taking a united stand against both parties’ strong arming scare tactics in favor of the American People:
“Yesterday marked a day that will go down in history, when Congressional Democrats and Republicans alike took on full responsibility to protect the interests of taxpaying Americans, and defeated the deceptive bail out bill, defying the dictates of the Administration, the House Majority Leadership, the House Minority Leadership and the special interests on Wall Street.“
The rest of the letter from Kucinich details WHY we MUST take action…just NOT this action that the Administration and some in Congress want us to rush to passage; he also details what we should be doing instead.
“Obviously Congress must consider quickly another course. There are immediate issues which demand attention and responsible action by the Congress so that the taxpayers, their assets, and their futures are protected.
We MUST do something to protect millions of Americans whose homes, bank deposits, investments, and pensions are at risk in a financial system that has become seriously corrupted. We are told that we must stabilize markets in order for the people to be protected. I think we need to protect peoples’ homes, bank deposits, investments, and pensions, to order to stabilize the market.
We cannot delay taking action. But the action must benefit all Americans, not just a privileged few. Otherwise, more plans will fail, and the financial security of everyone will be at risk.
The $700 billion bailout would have added to our existing unbearable load of national debt, trade deficits, and the cost of paying for the war. It would have been a disaster for the American public and the government for decades and maybe even centuries to come.
To be sure, there are many different reasons why people voted against the bailout. The legislation did not regard in any meaningful way the plight of millions of Americans who are about to lose their homes. It did nothing to strengthen existing regulatory structures or impose new ones at the Securities and Exchange Commission and the Federal Reserve in order to protect investors. There were no direct protections for bank depositors. There was nothing to stop further speculation, which is what brought us into this mess in the first place.
This was a bailout for some firms (and investors) on Wall Street, with the idea that in doing so there would be certain, unspecified, general benefits to the economy.
This is a perfect time to open a broader discussion about our financial system, especially our monetary system. Such a discussion is like searching for a needle in a haystack, and then, upon finding it, discussing its qualities at great length. Let me briefly describe the haystack instead.
Here is a very quick explanation of the $700 billion bailout within the context of the mechanics of our monetary and banking system:
- The taxpayers loan money to the banks. But the taxpayers do not have the money. So we have to borrow it from the banks to give it back to the banks. But the banks do not have the money to loan to the government. So they create it into existence (through a mechanism called fractional reserve) and then loan it to us, at interest, so we can then give it back to them.
This is the system. This is the standard mechanism used to expand the money supply on a daily basis not a special one designed only for the “$700 billion” transaction. People will explain this to you in many different ways, but this is what it comes down to.
The banks needed Congress’ approval. Of course in this topsy turvy world, it is the banks which set the terms of the money they are borrowing from the taxpayers. And what do we get for this transaction? Long term debt enslavement of our country. We get to pay back to the banks trillions of dollars ($700 billion with compounded interest) and the banks give us their bad debt which they cull from everywhere in the world.
Who could turn down a deal like this? I did.
The globalization of the debt puts the United States in the position that in order to repay the money that we borrow from the banks (for the banks) we could be forced to accept International Monetary Fund dictates which involve cutting health, social security benefits and all other social spending in addition to reducing wages and exploiting our natural resources. This inevitably leads to a loss of economic, social and political freedom.
Under the failed $700 billion bailout plan, Wall Street’s profits are Wall Street’s profits and Wall Street’s losses are the taxpayers’ losses. Profits are capitalized. Losses are socialized.
We are at a teachable moment on matters of money and finance. In the coming days and weeks, I will share with you thoughts about what can be done to take us not just in a new direction, but in a new direction which is just.”
Kucinich also encourages every American to become more familiar with our monetary system and the topic of debt with an animated documentary
“Money as Debt”which Kucinich says “is a useful, though by no means definitive, introduction to the topic of debt and the monetary system.”(Note: Bold text has been added here to highlight important passages.)