A chat with Bernie Sanders on the Bailout

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Sanders, Junior Senator for Vermont (I); de facto socialist

September 30, 2008 | [print_link]

Interview With Senator Bernie Sanders on The Bailout

By Rob Kall | Chief Editor, OpedNews

Thanks for the invaluable volunteer help of Jay  Farrington in transcribing the interview.

Kall: So, I’m so glad you could be with us speaking to the Philadelphia area. You’re really doing a great job standing up in this conversation and I figure I’m let you talk to the audience and tell them what you want to—make sure you get after them, and then we can have a conversation if there’s some time after that.

Sanders: Sure, well, my main concern is that, since President Bush has been in office, what we have seen is a significant decline in the standard of living of the middle class; people’s median income’s gone down; Six million have slipped out of the middle class and into poverty; seven million people have lost their health insurance; the gap between the very rich and everybody else has gone wild;

Meanwhile, while the middleclass is slipping, the people on top have done extraordinarily well: you have the incredible reality that the top 400 individuals in this country have seen a 670 Billion dollar, that’s a B, Billion dollar increase in their wealth since Bush has been president. So when I look at this proposed bailout, the first question that comes to my mind is, “Who’s going to pay for this thing?”

Given the disastrous impact that Bush’s policies have had on the middle class, why should it be the middle class that really has to bail out the excesses of Wall Street, when those guys have done very, very well.

So, my main concern right now is to make sure that this bailout is paid for by those people who have benefited out of Bush’s policies. There is the top .01%, who now earn more in income, by the way, than the bottom 50% so, that’s my first concern.

My second concern is if we go forward in this proposal, that we make certain that the assets purchased for banks are realistically discounted; in other words, taxpayers of the country don’t pay more for assets than they should and I also want to make sure that when taxpayers put money into an asset that in fact, we end up receiving equity stakes in the bailed out companies. If we’re going to put up the money we need to own a percentage of those companies.

The other concerns that I have, Rob, are that we have to understand how we got into this precipitous, this very dangerous situation and that has a lot to do with the deregulation that we have seen for the last many years.

I voted while I was in the House (I was on the Banking Committee there) against the Gramm Leach Bliley legislation, which took down the firewalls that had been established since the Great Depression and I think that is one of the precipitating factors that leads us to where we are today.

Also, when we see the tremendous volatility in oil prices, we understand, I believe, anyhow, that there is a great deal of speculation going on there as well. So, what we need to do is do sensible re-regulation; I think we have, if we’ve learned anything in this crisis, it is that we cannot trust these major financial institutions to do the right thing in terms of protecting consumers. Nor will people who are purchasing oil futures show any concern for people who have to pay $3.70 for a gallon of gas.

So I think the function of government is in fact to protect consumers, protect workers. We have let those principles slide very significantly in recent years on these right wing economic principles which include not only deregulation, but tax breaks for billionaires under the great “trickle down” theory that somehow we all benefit when billionaires get tax breaks and also unfettered free trade—somehow it’s going to work wonders for the middle class while we allow companies to throw American workers out on the street, move to China and then bring their products back tariff free…so that’s an important part of what I want to see done; I think sensible re-regulation is important and the other thing; a couple of other things that are important to me. 

[That} this is not being talked about is the reason we are where we are today…because you have institutions that are too big to fail, and they have to be bailed out because if they fail, they’re going to take down a significant part of the economy with them. I believe, and it seems to me pretty commonsensical, that if an institution is too big to fail, then it is too big to exist.

Kall: Boy, do I agree with that…

Sanders:  But you’re not hearing much discussion; let me give you an example and then I’ll give it all over to you; right now, which is in the last few weeks, Bank of America which is the nation’s largest depository institution has taken over Country Wide, which is the nation’s largest mortgage lender and they’ve absorbed Merrill Lynch, the nation’s largest brokerage house. Now you tell me what happens in five years if Bank of America teeters, do you have a doubt for a second that they’re going to have to be bailed out?

Kall:  Absolutely, that’s what’s going to happen; in your petition(here) you say not only that they’re too big to exist, but we need to determine which companies fall into this category and then break them up?

Sanders: Right.

Kall:  Wow!

Sanders: Does that seem so radical?

Kall: It sounds wonderfully radical. How do we do it?

Sanders: Well, hopefully we do it by electing a new president; hopefully we do it by developing a strong grass roots movement in this country which demands that a new president and Democratic leadership in the house and the senate move forward in a progressive manner.

But I think especially after the experiences of the last couple of weeks, if people don’t understand that we’ve got to break up some of these huge companies which are too big to fail, if we don’t under stand it now, we’re never going to understand it; this economy has so many structural problems, but increased monopolization of industry after industry, fewer and fewer companies owning and controlling one segment of our society after another… I mean this is something that we just have to take a look at.

Kall: I’ve tried to pull back a little and look at this. What Paulson says, and what panicked Paulson and the leaders in the senate was that there was a drying up of liquidity—of availability of money to be loaned for whatever use for last week.

Sanders: Yes.

Kall:  And that’s what set off the panic. It wasn’t that certain companies were going out of business; it was the liquidity and the availability of loans.

Sanders: Well, their argument, for better or worse was that if companies can’t get their credit, there is a danger that companies will fold.

Kall: Yeah, but the solution doesn’t have to be to protect these loser companies that have failed, basically that have gambled away and have gone into extensive risk. That was not successful. The answer was to maintain liquidity by whatever means. Right?

Sanders:  Yep.

Kall: So, what I don’t understand is—I was talking to my bank; they’re doing very well. It’s a local bank; it’s a decent-sized bank. They say that the way they did it was they didn’t get involved in a lot of the loans that a lot of the others got involved with.

Sanders: That’s right.

Kall: It’s almost like they’re being punished. “You didn’t get involved, so you don’t get a piece of the pie.”  Why are we rewarding the ones that did?

Sanders: Well, that’s obviously a hotly debated question here. And that gets to executive compensation as well. But it is very clear that this crisis has been caused by deregulation, which means that trillions of dollars of financial transactions are now taking place in an unregulated area, and frankly, nobody knows what the hell is going on.

What we do know is that it’s the result of the subprime mortgage crisis; one large institution after another is–we have seen a number of them folding already and others are in danger of folding so the issue now is, according to Bernake and according to Paulson, if the Congress does not act in the very near future, very short term, they worry very much about a financial meltdown.

Now, the difficulty that many people have–in Congress, most members of Congress and Senators are not PhD economists. And many of these new financial instruments, these “credit swaps” and so forth and so on, are enormously complicated; I mean, I was listening to Paulson today; we just had a meeting with him a few hours ago, he was saying, you know somebody was talking about the government taking a look at that, and he was saying, “You know, hey, there are very few people that understand this; you’re not going to find this in the government.” But your point about these people using deregulation to engage in incredibly risky behavior so that they can make wild and excessive short term profits then endangering the entire system; that is exactly right, and they cannot be rewarded.

I think we have to take a hard look at how we got to where we are today. I mean, it is interesting that your local bank, which makes loans to people they know; they know whether these people can repay the loans, they know the small businesses. They’re doing just fine, and I think, by the way, that’s the case with the state of Vermont as well. But when you have these huge companies, you have people selling loans and absolutely irresponsibly, making money, fully understanding that in a few years people are not going to be able to repay these loans, and they don’t take responsibility for it; they just pass it on to somebody else, who passes it on to somebody else, and it ends up in Japan or God knows where; you got a real problem with that type of system.

Kall: The second half of the hour I have David Korten on. He wrote the Post Corporate World; Life After Capitalism. Are you familiar with his writing at all?

Sanders: I’ve heard the title, but honestly I haven’t read it.

Kall: Basically, what he’s saying is all the complicated derivatives that make money on money we’ve got to get rid of them, too. We’ve got to get back to Main Street, where people make money making products and services. That’s where we should be taking care of business and not with all these “theoretical” constructs.

Sanders: That makes a lot of sense, I mean look at what’s happened, right now; you’ve seen a tremendous increase in financial institutions in the amount of money they play with at the same time as we’re seeing the loss of millions of good paying manufacturing jobs… we make less and less in America and we’re importing almost everything we use from another country; I think you don’t have to be a PhD in economics to understand that there’s something a little but weird that we’re not making real products that our people are consuming and that we’re losing family farms and so much of our wealth is tied up in these very exotic and complicated financial transactions that are taking place under the radar screen, without transparency.

Just the other day on another issue, not unrelated but a separate issue, is the price of oil went soaring; there’s been a big debate in congress as to why the price of oil is as high as it is, why people pay $3.70 for a gallon of gas. The conservatives and the Republicans say it is all supply and demand, But when you see these wild fluctuations that take place in a day… That has nothing to do with supply and demand —that has to do with money being pumped in to oil futures and a significant amount of those transactions take place also away from the public eye; they are not transparent we don’t know who controls what, we do know that in recent years, whether it was Enron capturing electricity distribution on the west coast; whether it’s BP, who put a corner on propane and Amarand, a hedge fund, putting a corner on natural gas. In all three of those markets: electricity on the west coast, natural gas and propane, there was significant price manipulation.

Kall: What about– just recently they put a freeze for a couple of days on “short selling”. Why can’t they do that on speculation in oil?

Sanders: I don’t know the answer to that; what I can tell you is that some of us have worked very hard to pass legislation that would do away with the Enron loophole which would allow transparency, where today things are operating underneath the radar screen and there’s a lot more that has to be done–

Kall: Who’s blocking it?

Sanders: Well, obviously the energy companies, the oil companies have enormous power the Republicans are not interested in (unintell); they rather “drill baby, drill,” although that won’t lower the price of gas, if at all, for another 15 years or so.

Kall: It seems like right now, there’s an incredible opportunity we’ve got a failed system, it’s broken. Even the Wall street journal has said that “Wall Street as we knew it is dead.” Is there any talk in the Senate of really evaluating what’s going on and coming up with something “new and different” that makes more sense?

Sanders: It doesn’t quite work quite like that (laughs). No. The answer is no to that. But I think on the part of the American people, they are asking those questions, but I can’t tell you that’s really filtered up to the Senate. What is just stunning—

Kall: I don’t get it there: how do we get it up to the Senate? Why—

Sanders: What we need to do, number one obviously we need a new president we need to elect Obama; number two we need a strong grassroots movement who has to say to the Congress, “Stop looking to your campaign contributors for advice; listen to the needs of ordinary Americans.”

I sit on the budget committee and I can tell you, I mean the good news out there, is that if we had a sensible set of priorities in this country we could do extraordinary things. Because you can do a lot of things for relatively small amounts of money. I mean right now, you have a president who is spending 10 Billion dollars every single month on the war in Iraq.

Do you know that by simply quadrupling the number of community health centers in this country, federally qualified community health centers, you can provide primary health care to every man woman and child, low cost prescription drugs and dental care for less than eight billion dollars a year? You could do that for eight billion dollars a year; we’re spending ten billion—

Kall: So for eight billion dollars we could be providing health care to every person—

Sanders: Primary health care; I’m not talking about hospital care, I’m not talking about surgery, but every American would be able to go to see a doctor, or a dentist, regardless of their income and low cost insurance.

Kall: So there’s all this leverage; right now, Congress has incredible leverage to get these cessions, why doesn’t somebody throw that in there so that at least we make a major step toward taking care of Americans the way we morally should.

Sanders: But what we’re trying to do now is to bring forth a major stimulus package. Remember: the fight right now and a lot of people do not understand it, they don’t understand it, is that in the last two years, the Republicans have mounted 95 filibusters; did you know that?

Kall: When I went to the Progressive Summit meeting in February, it was up around 60—

Sanders: It’s now over 90; it’s 95, I believe. Which is an all-time…world record for one session of Congress. So it’s hard to do good things. You’ve got a president who will veto serious legislation. But what we are trying to do right now is to get a stimulus package which will begin trying to rebuild America; this one doesn’t go anywhere near as far as I would like, but it would put money into infrastructure, there’s a continuing resolution that was passed in the House today that will be probably passed in the Senate tomorrow– I hope it will be passed. Which, among other things, doubles the amount of money that we spend for fuel assistance to help people from going cold in the wintertime; that’s legislation that I helped write.

Kall: Be about even with the previous year, then.

Sanders: Well, we’ll double the amount of funding; so it’s going to be doubled in funding from the Lackey Program, which is significant; so to answer your question, when you need 60 votes to get anything done in the senate, and on a good day we have 51, that’s hard. When you have a President that will veto anything, it’s hard.

I hope very much that this election will give us a new president; I hope that we will have gains in the House and the Senate and most importantly, I hope that we will have mass, grassroots movement which says to the Congress, you’ve got to be bold, these are tough times. We can have a national health care program for all people; we can make college education free or at least affordable. Are these things expensive? Yes they are. But they are a hell of a lot less expensive than the war in Iraq; they are much less expensive that huge tax breaks for the wealthiest people in this country. They are much less expensive than spending 540 Billion dollars or whatever on the military. So we need to change our national priorities and I hope that we can move into that direction.

Kall: Amen. One thing I wrote about today is that the amount we’re spending on health care is so much more than any other country, even though we’re not getting great quality…

Sanders: Yes, certainly.

Kall: But the system that we have is a quarter (25%) of our national budget, and it’s getting worse. It seems like we’re just looking around the corner for that to become another crisis were going to face and I wonder if it doesn’t make sense to look at that at the same time we’re looking at this one.

Sanders: Well, look; you can look at anything you want; George Bush is the president. Remember George Bush is the guy who vetoed legislation to expand health care to a few million low income kids; you’re talking about transforming the entire healthcare system and it isn’t going to happen.

But again, your point about healthcare is everybody should understand that while we have 46 million Americans who have no health insurance and many are under-insured, the price of health care is soaring; we spend twice as much per person on health care as do the people of any other country. And yet the quality of our care, the outcomes are not good and it is so much more expensive, so should we do what other countries do and have a national health care system?

Of course we should. And the truth is, we don’t have to spend any more on health care and we can provide health care for all our people. But it is certainly not going to happen under George Bush…and it won’t happen under a president Obama unless there’s a strong grass roots movement, because, don’t kid yourself, the insurance companies, the pharmaceutical companies, they are going to put money into the Democratic party; they don’t care what party they put money into as long as they look out for their interests.

And the only antidote to that is a strong grassroots movement that says to members of Congress whether they are Rep or Dem…hey, stop looking at your campaign contributors, in fact let’s move to public funding of elections and stop worrying about it.

Kall: We have an interesting readership at OpEdNews. This month we’re going to see about 700 thousand unique visitors; about 38% are Democrats, about 88% are “Lefties”. So these are not necessarily supporting Democrats. They’re people who—you know, universally they love you, I’ll tell you that!

Sanders: Well, thank you.

Kall: I have one last question for you ’cause I know you’ve got to go. I have been developing the idea of “Bottom Up. Bottom up is showing up in campaigns, Joe Trippe talks about how it helped Obama beat Hillary with her Top Down campaign—How do you see Bottom Up applying in your work?

Sanders: That’s exactly what we’ve got to do; we’ve got to re-vitalize American democracy I think members of Congress are intelligent people, decent people are very isolated from the realities of real life. I can tell you when I ran for the senate two years ago, and I suspect that many of you are—you know, the way we ran; I don’t take any corporate PACS (political action committees) we had help from tens and tens and tens of thousands of individual contributors—you know, put in 25 bucks, or 50 bucks; we knocked to win the election, you know, we put money on radio and  television, but you know what, we hired a ton of people to go out knocking; I think we ended up knocking on something like 17,000 doors in the state of Vermont.

So I think what we really need to do is mobilize people to knock on doors to educate people—don’t ever underestimate what people in America DON’T KNOW about the political process. Most people probably don’t even know the name of their congressman, whether he or she is a Democrat or a Republican or how they vote; the media is not going to do it. The media cover what goes on here just terribly. They don’t know the difference between a huge bill of 500 billion or a small bill of 10 million. So we need Independent Media and that’s what you guys are doing. Which is if there’s one very positive thing I think is happening is there are many progressive web sites, including yours, that does a great, great job in bringing an independent perspective to people that you’re not going to see on CBS or ABC.

So there is an enormous amount of work to be done, but I happen to agree absolutely with you: Trust me, there will not be change even with a new president, more Democrats, unless we see pressure coming from the grass roots who demand that government starts representing everybody rather than the elite.

Kall: Great. Well, I hope we can have you back here periodically.

Sanders: My pleasure. Thanks very much. Take care.

Kall: Keep it up; great work, bye.

Bernie Sanders. This is the Rob Kall radio show, that’s Senator Bernie Sanders, WNJC it’s 1360 am.

Authors Bio:

Rob Kall is executive editor and publisher of OpEdNews.com, President of Futurehealth, Incinventor . He is also published regularly on the Huffingtonpost.com. He is a frequent Speaker on Politics, Impeachment, The art, science and power of story, heroes and the hero’s journey, Positive Psychology, Stress, Biofeedback and a wide range of subjects. He is a campaign consultant specializing in tapping the power of stories for issue positioning, stump speeches and debates. See more of his articles here and, older ones, here. His radio show, The Rob Kall Show, runs 9-10 PM EST Wednesday evenings, on AM 1360, WNJC and is archived on www.whiterosesociety.org Or listen to it streaming, live at either www.wnjc1360.com or here
Or check the archived interviews at: whiterosesociety.org

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