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Yahoo!The President has called for swift passage of the Safeguards for a New Economy (S.A.N.E.) bill. The omnibus economic package includes a federal maximum wage, mandatory “True Cost Accounting,” a phased withdrawal from complex financial instruments, and other measures intended to improve life for ordinary Americans. (See highlights sidebar) He also repeated earlier calls for passage of the “Ban on Lobbying” bill currently making its way through Congress.
STRICK FRANKLIN
Treasury Secretary Paul Krugman stressed the importance of the bill. “Markets make great servants, terrible leaders, and absurd religions,” said Krugman, quoting Paul Hawken, an advocate of corporate responsibility and author of “Blessed Unrest, How the Largest Movement in the World Came into Being and Why No One Saw It Coming.”
“At this point, the market is our leader and our religion. No wonder the median standard of living has been declining so much for so long.”
Krugman said that the new Treasury bill seeks to ensure the prosperity of all citizens, rather than simply supporting large corporations and the wealthy. “The market is supposed to serve us. Unfortunately, we have ended up serving the market. That’s very bad.”
Much as Roosevelt, after the Great Depression, put the brakes on C.E.O. wages and irresponsible banking practices, administration officials claim that today we need to rein in the industry that has caused such chaos and misery.
“The building blocks of post-World War II American middle-class prosperity have all been swept away,” said House Speaker Nancy Pelosi, who initially opposed the proposals before overwhelming public support helped change her mind. “This bill brings a level of sanity and restraint back to the system that allowed companies like Enron, Bear Stearns, Fannie Mae, and Freddie Mac to fleece Americans for all they were worth.”
Merrill Lynch C.E.O. John Thain disputed Ms. Pelosi’s account. “High C.E.O. salaries, sophisticated financial instruments, and the freedom to speculate freely have for the past thirty years been instrumental in driving us to achieve the highest shareholder returns in the world outside of Russia. Shareholders have been very grateful for those returns. We mustn’t look at one rash of foreclosures, or one system collapse, and forget the decade of high returns that enabled a new wave of prosperity for a certain number of people.”
Treasury Secretary Krugman cited the pressure applied by progressive activist groups as instrumental in the S.A.N.E. Act’s success despite overwhelming counterpressure from financial industry lobbyists, who have been working overtime in anticipation of the likely passage of the “Ban on Lobbying” bill, which prohibits lobbying on behalf of private individuals or corporations earning more than $1 million annually.
“We’ve got popular pressure to thank for letting us make the market serve humans once again,” Mr. Krugman said. He also stressed that even passage of the S.A.N.E. bill would be meaningless without passage of the “Ban on Lobbying” bill. Only by banning lobbying, Mr. Krugman added, would it be possible to assure that the changes mandated by the S.A.N.E. Act are not rolled back through the influence of big corporations.
Details of S.A.N.E. Act
Caps Wages. Caps salaries, in part to reduce the incentive of C.E.O.s to speculate wildly with investors’ funds.
Busts Trusts. Breaks up financial conglomerates and reinstate the 1933 Glass-Steagall Act keeping investment banks and commercial banks separate, in order to reduce speculation.
Taxes Speculation. Spearheads an international 1 percent tax on financial transactions, to slow speculation and reduce market volatility.
Stabilizes Mortgages. Keeps Fannie Mae and Freddie Mac, which were formed to boost home ownership, under government management, and imposes a moratorium on foreclosures.
Invests in Housing. Reinvests in public housing and renews rent control, until the “ownership society” becomes real.
Prices for True Cost. Establishes a “true cost” pricing system to ensure that prices reflect the true cost to society of products, services, and practices.
Taxes Inheritance. Establishes a 100 percent tax on inheritance for fortunes over $500,000. These revenues will enable a quicker implementation of universal health care, affordable housing, guaranteed college education, and other measures considered standard in almost every other developed country.
Sets Emergency Tax. Provides for an emergency surtax on the wealthy in case of future financial meltdowns, to further discourage the sort of reckless speculation that fueled the latest banking crisis.
Limits Derivatives. Regulates and streamlines the market in abstract financial instruments, especially those derivatives and derivatives of derivatives which serve no social purpose whatsoever.
Sets its “sites” ??? Shame!
Comment on November 12, 2008 02:06 pm