These are frightening and unusual times. The world of finance and the overall economy are both in perilous condition. Almost every day a new crisis erupts. The stock market has plunged dramatically, and is more volatile, than at any time in memory. Loans between banks have dried up. Major financial houses have either failed or merged. Government bailout follows government bailout.
Just how deep the financial crisis is can be seen from this paradox: the Bush administration, the most wild and irresponsible defender of right-wing economic ideology and free markets in our nation's history, now has to muster one initiative after another to intervene in the financial markets. It is even in the process of nationalizing banks.
The economic crisis has received less attention in the media than the financial crisis, but it is no less real or threatening. Unemployment, which is conservatively estimated in our country, last month hit a five-year high of 6.1 percent, and it is rising. In July, home prices - the main source of most Americans' wealth - fell 16 percent in 20 U.S. cities from a year earlier. The bottom is nowhere in sight. Foreclosures are at the highest rate in almost three decades. Health care, food and educational costs are rising, and more and more Americans are lining up at emergency shelters and food shelves.
Meanwhile, during President Bush's tenure in office, the gap between the very wealthy and everyone else has dramatically increased. While 6 million Americans have slipped into poverty, while median income for working families has declined by more than $2,000, while 7 million people have lost their health insurance and 4 million workers lost their pensions, the highest income Americans have made out like bandits - which many of them are.
In Bush's first seven years, the top 400 individuals in America saw an increase in their wealth of $670 billion, so that by 2007 the top 1 percent earned more income than the bottom 50 percent. Tax cuts for the wealthy, unfettered free trade, no-bid contracts, deregulation of every conceivable market and a belief that markets are the best determinant of social policy have together brought about a massive transfer of wealth from the middle class to the very wealthy. The backbone of the American economy for the past 50 years, a strong and prosperous middle class, has been severely weakened by the extremist policies of this administration. The economic future for the next generation looks bleak.
At this pivotal moment in our history, the American people are demanding fundamental changes in our nation's economic policies. Congress will be reconvening for a lame-duck session on November 17. What should we do? The proposals that have been coming out of Washington, in my view, are not sufficient.
If you could read the e-mails that pour into my office from Vermont and across the country, you would realize how furious the American people are at the greed, incompetence and irresponsibility of the Masters of the Universe on Wall Street who made billions while they drove our financial system to the brink of the abyss. Middle-class citizens of this country do not believe that they, who had nothing to do with causing this financial meltdown and who already have suffered as a result of Bush's reckless policies, should have to pay for Wall Street bailouts. They are absolutely right. Congress must demand that the cost of any bailout should be paid by those who benefited financially from Bush's policies and those who can best afford it. I proposed an income surtax of 10 percent on families earning more than $1 million a year. I will continue to fight so that any bailout is progressively funded.
In terms of any federal intervention, we need to insist that if the government buys mortgages and mortgage-backed paper - the so-called 'toxic assets' - it should be at current market prices, not at the price the lender set at the time of the loan. We should require equity stakes for taxpayers - something a British initiative seems to have forced Secretary Paulson into imitating. We also need to follow the British model of demanding that banks taking taxpayer money put taxpayer interests ahead of corporate profits, executive payouts, and risky investment strategies. Congress, as soon as possible, needs to reverse years of deregulation, and require accountability and transparency in the financial industry. It is beyond insane that tens of trillions of dollars of credit default swaps are circulating with no one knowing who owns these complicated instruments or what role they play in the financial markets. We also must pass new anti-trust legislation to make sure that in the future no entities are "too big to fail." If a financial institution is too big to fail, it is too big to exist.
When Congress reconvenes, it is clear to me that it must pass a massive "Rebuild America" program in order to address the looming economic crisis. If we can put up $700 billion to rescue bankers from their irresponsible decisions, we must make a major investment putting millions of Americans to work rebuilding our country.
I agree with a number of economists who have told us that, in order to get our country back on sound economic footing, we should make a major investment in repairing our crumbling transportation systems and electric grid. After decades of delay, we must end our dependence on fossil fuel and foreign oil and move boldly to energy efficiency and new sources of sustainable energy.
We also need to address the social crises we face in terms of education, health care, nutrition, and poverty. In the midst of the current economic crisis, we must minimize the suffering of the most vulnerable among us, and we must ensure the future of our country by developing the best-educated workforce in the world.
Let me be specific about what a "Rebuild America" program should include:
We should make a major financial commitment to improving our roads and bridges. We must develop energy-efficient rail lines for both freight and high-speed passenger service and promote public transportation. We need to bring our water and sewer systems into the 21st century. In terms of job creation, every billion dollars invested in the physical infrastructure creates 47,000 new jobs.
We should make a major financial commitment to energy efficiency and sustainable energy. With a major investment, we could stop importing foreign oil in 10 years, produce all of our electricity from sustainable energy within a decade, and substantially cut greenhouse gas emissions. We can make the United States the world leader in the construction of solar, wind, bio-fuel and geothermal facilities for energy production, as well as creating a significant number of jobs by making our homes, offices, schools and factories far more energy efficient.
We should make a major financial commitment to education. We must end the disgrace of millions of children under five attending totally inadequate child-care facilities while millions of other families are unable to afford a college education. We must invest in new classrooms, new computers, energy-efficient heating and cooling systems. That would not only create jobs, but relieve some of the burden on the regressive property tax.
In these harsh economic times, we should provide at least a seven-week extension in unemployment benefits, so benefits don't dry up for more than 1 million Americans by the end of the year. We should increase eligibility for food stamps and other nutrition programs to assist the hard-pressed middle class as well as the poor. We should substantially increase funding for the highly-effective community health center program so that, at a minimum, all Americans have access to affordable primary health care, dental care, and low-cost prescription drugs.
Finally, with cities and states facing deep deficits and cutting basic services, we must make a major, immediate financial commitment to states and municipalities. Their crisis will only grow worse as homes are foreclosed, as income and capital gains decline, as fees on sales of homes and motor vehicles diminish. For too long, unfunded federal mandates have drained the budgets of states and communities. The strength and vitality of America's communities must be restored.
The American people today are angry and confused. They feel they have lost their grip on the reins of power in our democratic society. While crooked Wall Street executives walk away from failing companies with millions in golden parachutes, middle-class Americans are seeing their life's savings disappear and their dreams for their kids evaporate.
I hope a new Democratic president will take office in January along with expanded Democratic majorities in the U.S. House and U.S. Senate. With strong grass-roots participation, we can pass legislation which creates millions of good-paying jobs as we address the major economic and social crises that confront our country. Now is the time to begin restoring the faith of the American people in our government. Now is the time to make government work, not just for the wealthy few, but for all Americans.