"No Banker Bailout"

NYC Local of the SP-USA
Rejects the "Banker Bailout" Proposal.

www.spnyc.org/main/

The Socialist Party USA (NYC local) protests against
the proposed $700 billion Wall Street bailout. This
proposal caters to the wishes of Wall Street bankers
while disregarding the increasing indebtedness and
economic squeeze which most working people are
experiencing. The corporate “bailout culture” sends
the message to all sorts of corporations that public
tax funds are fair game for laying-off bad
investments.

Wall Street is responsible for cleaning up its own
mess. The primary source of the immediate financial
crisis in the banking industry is mortgaged-backed
securities packaged by mortgage lenders and then sold
to banks that were willing to make a market for these
new financial instruments. Bankers made these
purchases with full knowledge of the potential for
loss. To now ask the federal government to cover
these losses violates all the laws of the free market,
which Wall Street rhetorically defends, and creates a
scenario where banks can make no-risk investments no
matter how irresponsible they are. The government
will become an ATM for bad investments.

Millions of mortgages are currently in default and are
now uncollectible. This is the fault of the lenders
who designed schemes in which delinquent homeowners
would face punitive balloon payments with exorbitant
interest rates. This accelerated the broader
financial crisis and forced millions of families out
of their homes. The mortgage lenders are the guilty
parties and should face criminal charges for predatory
lending and false advertising.

The proposed antidote to the crisis may be worse than
the illness. Pumping $700 billion dollars into an
economy which already features rising food and fuel
prices is reckless. The funds sent into the financial
sector will circulate into other equally unproductive
parts of the economy which could spark even broader
inflation. State-relief must serve the dual purpose
of stabilizing the economy while creating momentum for
the development of a new productive economy.

A bailout will enable the unhealthy economic
relationships upon which the US economy is currently
based to continue. The pattern of dependence on
Middle East oil exporters and multi-national companies
producing export goods in Asia is non-viable. The
only thing propping up the domestic US economy is the
return of dollars held abroad through financial and
real estate markets. This results in re-occurring
speculative bubbles. Consequently, the US has
developed a dangerous dependence on imports – oil,
goods and capital – inside of an economy which has
shed its productive manufacturing sector.

Overall, the Socialist Party (NYC local) strives for
the abolition of all financial markets, the guarantee
of housing, healthcare and employment as human rights,
and the creation of an economy based on the production
of goods and services which fulfill the physical and
intellectual needs of the people in it, not based on
financial speculation and usury. While we see these
demands as the only way of achieving a long-lasting
solution to the social problems capitalism engenders,
we recognize the need for immediate action. In this
light we propose that the following measures be
implemented immediately.

• The US government should create a fund to stabilize
defaulting mortgage holders. The fund would extend
credit to homeowners in need of loans to bridge their
way through the financial crisis. In addition,
legislation should be passed to outlaw predatory
mortgages and force lenders to re-negotiate
unfavorable terms with home-owners. A moratorium on
foreclosures should be declared until such legislation
is passed.

• A federal tax of 6% on all incomes above $5 million
dollars should be enacted immediately. This funding
pool should be used to extend low or no-interest loans
to non-profit co-operatives and worker-managed
enterprises for the creation of new manufacturing
projects. This will help create a new productive core
of the US economy.

• The Congress should immediately pass House
Resolution 676 to establish a National Health
Insurance Program. This would remove a major cause of
personal bankruptcy claims – bills from healthcare
procedures.

• Legislation should be enacted to create a “Tobin
Tax” on financial transactions of .02 cents per
transaction. The resulting funds would be pooled to
share with indebted state governments to prevent cuts
in vital social services.

• Emergency legislation should be passed to remove the
wage base on social security payments. Currently, the
employer and employee must pay a 12.4% social security
tax on income up to $97,500. Any income above this
amount is exempt from social security taxes. Removing
this tax ceiling would secure future payments of
social security and allow for an increased payout
thereby reducing the dependency of retired workers on
401k plans tied to outcomes on Wall Street.