Say what you want about Vermont's Sen. Bernard Sanders, but he is right more often than not on economic issues. Nearly 10 years ago, Congress was debating whether to eliminate the Glass-Steagall Act of 1933, which put up firewalls to keep commercial banks from owning investment banks and vice versa.
Sanders, then a congressman, warned that the Gramm-Leach-Bliley Act "will do more harm than good" and lead to fewer banks and financial service providers, result in increased fees, diminish credit for consumers and small businesses and increase taxpayer exposure in the event financial institutions fail.
He was a voice in the wilderness then, and the Gramm-Leach-Bliley bill passed in 1999 with wide bipartisan support. Sure enough, everything Sanders predicted came to pass -- and then some.
After the most tumultuous week in American finance since the 1930s, Sanders proposed a plan to avoid future failures of businesses supposedly "too big to fail." Before the government hands out our money to the people who made this mess, our lawmakers in Washington ought to consider Sanders' plan.
Sanders has proposed a surtax on the very wealthy to help pay for bailouts of Fannie Mae, Freddie Mac and American International Group -- a five-year, 10 percent surtax on income over $1 million a year for couples and over $500,000 for single taxpayers. He said that would raise more than $300 billion in revenue.
He also wants stronger oversight of financial institutions. That means reinstating Glass-Steagall and the rest of the regulatory firewalls that were ripped down a decade ago, re-regulating the energy markets to end rampant speculation in oil and regulating or abolishing various financial instruments that created the enormous shadow banking system at the heart of the current financial crisis.
The giant financial institutions such as Citigroup and Bank of America should be broken up, Sanders said, so that no one company in the future could bring the American economy down with it.
Finally, Sanders is calling for a major economic recovery package which puts Americans to work at decent wages, puts people back rebuilding our crumbling infrastructure and moves us to energy efficiency and sustainable energy.
There is nothing radical in any of Sanders' proposals. Conservatives will scream over his surtax, but in reality, Sanders is merely asking that the people who benefited the most from the financial bubble pay their share of the cleanup now that the bubble has burst.
According to Sanders, the richest 0.1 percent now earn more money than the bottom 50 percent of Americans, and the top 1 percent own more wealth than the bottom 90 percent. The wealthiest 400 people in our country saw their wealth increase by $670 billion while Bush has been president.
While this was going on, Sanders said that nearly 6 million Americans have slipped into poverty in the past eight years, median family income for working Americans has declined by more than $2,000, more than 7 million Americans have lost their health insurance, more than 4 million have lost their pensions, foreclosures are at an all time high, total consumer debt has more than doubled and we have a national debt exceeding $9.7 trillion.
The result of eight years of huge tax breaks for the rich and the wholesale deregulation of commerce has been massive redistribution of wealth from the middle class to the very wealthy. Sanders' proposal is simply rebalancing the scales and taking the burden of the financial meltdown off the backs of the middle class.
We agree with Sanders. There should not be bailouts for the rich or the companies that created the financial mess, without first making them pay their fair share of the cost.
We also agree, as Sanders and others have pointed out in recent days, that if the federal government can suddenly find $700 billion to prop up the financial markets, it can find money to protect working families from the difficult times they are now experiencing.