Pay at Goldman Sachs this year is set to beat the boom levels enjoyed before the financial crisis, when top executives raked in tens of millions of dollars in year-end bonuses. — Financial Times
If there is one thing that unites those on the right and the left who are speaking out against the direction the country is headed, it is their mutual disgust at the government’s hugely expensive bailout of the financial industry. Nothing provokes anger and distrust among people of both political persuasions than seeing the culprits behind the biggest economic catastrophe since the Great Depression become even more powerful compliments of "we the taxpayer" – especially when bonus payments on Wall Street now go hand in glove with massive layoffs on Main Street.
Despite the crisis, the remaining financial market participants have benefitted greatly from government bailouts. Thanks to capital injections, guarantees, treasury lending and asset purchases, liquidity provision and other central bank support the financial sector is cleaning up – and with fewer competitors.
Two years after the start of the crisis, some $18 trillion of taxpayer money has gone mostly to prop up banks while ordinary Americans are facing record home foreclosures, job losses and credit card delinquencies. This as industry lobbyists are working overtime in Washington to thwart even the limited, piecemeal reforms that Congress and the administration are developing in a half-hearted attempt to level the playing field.
It is clear that the financial industry’s blackmail has taken a toll across ideological lines. Indeed, conservative columnist David Brooks in an op-ed piece in The New York Times argues that “Red and Blue America” must move beyond “the obsolete culture war” and unite in “a movement to restore economic values.”
The goal of the movement, according to Brooks, “will be to make the U.S. again a producer economy, not a consumer economy. It will champion a return to financial self-restraint, large and small.”
Brooks frames the issue in terms of personal responsibility, calling on both sides to join together to reverse the “slide in economic morality.” In doing so, he emphasizes the movement “will have to take on what you might call the lobbyist ethos — the righteous conviction held by (special interests) that their groups are entitled to every possible appropriation, regardless of the larger public cost.” Furthermore, he says all options should be on the table. "A crusade for economic self-restraint would have to rearrange the current alliances and embrace policies like energy taxes and spending cuts that are now deemed politically impossible."
We agree that K-Street should be ground zero in the effort to restore fairness to our economic system. We also concur there should be no sacred cows. Towards this end, the movement’s first order of business should be to demand that the financial sector pull their weight in the crisis. The best mechanism to ensure their compliance would be a financial-transaction tax.
Such a fee on all trades of financial products, also known as a "Tobin Tax," is gaining advocates in world financial markets, most notably the UK and Germany. One proposal calls for a .05 percent tax to be levied across the G20 countries, which could yield $690 billion a year to finance the costs of the crisis.
The Wall Street bailout was an indirect assault on US taxpayers to cover the cost of the financial-sector's malfeasance. Citizens across the political spectrum are outraged, rightly so, that the U.S. Treasury and Federal Reserve acted as middlemen in a brazen scheme to transfer wealth from the working class to the rich.
The time has come for progressives and Tea Party demonstrators alike to put aide their differences over so-called "wedge issues" and unite behind a mutually beneficial campaign of economic justice. For without new forms of fiscal burden-sharing, those responsible for the crisis will continue not to pay their share - and the dispossessed will lose their faith in the democratic process.
Posted by Alias at September 29, 2009 10:19 AMThe dispossessed have already lost faith in the economic system. Home ownership certainly isn't the promise of the American Dream it used to be, neither is a 401k plan, nor is buying on credit. I don't know about a tax, and I'm dubious about whether politicians will do any good. The consumer is tightening his fist, refusing to spend. He's already practicing economic restraint.
Posted by: Justin at September 29, 2009 10:49 PM