10 Ways to Bail Out Wall Street (and Main Street) Without Soaking Taxpayers in Debt

As Congress debates the particulars of the Bush-Paulson bailout, one key question has gone largely unexplored: Who will pay for this mess?

Lawmakers in Congress appear to have assumed that the federal government will simply borrow more money to foot the bill for the bailout. The national debt ceiling will rise to a whopping $11.3 trillion, up from $8 trillion a year ago.

But this rush to borrowing merely shifts the bailout burden onto the backs of future taxpayers. Congress needs to change course -- and develop a "pay as we go" plan that makes Wall Street pay.

The lion's share of bailout funding should come from the high-finance gamblers and the wealthy CEOs who have so profited from our casino economy.

Funding the Bailout: Basic Principles

• Wall Street and speculators should pay now for the mess they created.
• Instead of borrowing from the super-wealthy beneficiaries of the casino economy, we should tax them.
• Any bailout should stimulate the real economy with investments in Main Street, not just Wall Street.

Broadening the Bailout Dollars

The debate over the bailout has so far concentrated on the $700 billion purchase of "troubled assets" proposed by Treasury Secretary Henry Paulson. A real "bailout" would also target the troubled households of working American families. A $200 billion "Main Street Stimulus Package" could bolster the real economy and those left vulnerable by the subprime mortgage meltdown. This package should include:

• A $130 billion annual investment in renewable energy to stimulate good jobs anchored in local economies and reduce our dependency on oil.
• A $50 billion outlay to help keep people in foreclosed homes through refinancing and creating new homeownership and housing opportunities. These funds could also help those locked out of the American Dream to purchase homes through nonspeculative mortgage programs.
• A $20 billion aid package to states to address the squeeze on state and local government services that declining tax revenues are now forcing.

A Responsible Plan to Pay for Recovery: $900 Billion in New Revenue

Below is our 10-point program to pay for this broader bailout. This plan would generate $900 billion a year until the costs of the bailout and stimulus program are paid for.

1. A Securities Transaction Tax: $100 Billion

A fair plan to pay for the bailout should include a modest financial transaction tax on the buying and selling of stock and other financial products. A penny on every $4 invested would generate $100 billion a year. Other European countries already tax stock transactions, and these transaction taxes effectively discourage speculation.

2. A Wealth Tax Surcharge on Households with $10 Million: $300 billion

Congress should institute a modest wealth tax surcharge on households with a net worth of more than $10 million. These households currently own and control more than 20 percent of the nation's private wealth. They have realized huge gains from the manipulation of capital markets and the asset bubbles that created the current crisis. A modest surcharge -- no more than 3 percent -- could generate more than $300 billion.

3. A Corporate Minimum Income Tax: $60 Billion

In August, the Government Accountability Office reported that two-thirds of U.S. corporations paid no income taxes between 1998 and 2005. These corporations paid nothing toward our shared expenses of defense, environmental protection, public health and education. Ordinary taxpayers should not be left holding this bag. A minimum corporate income tax should contribute toward the bailout.

4. A "Disgorgement" Recovery From Profligate CEOs: $40 Billion

Until several weeks ago, top CEOs and managers were collecting massive salaries and fees while they told the rest of us that "everything is fine." These CEOs gorged themselves and have taken the money and run. The four biggest investment banks on Wall Street shelled out $30 billion in bonuses last year. One of them, Lehman Brothers, has just gone under. Another, Bear Stearns, was bailed out earlier this year. To help pay for recovery, the new Treasury authority should seek the payback of executive compensation inappropriately extracted in the years before the Wall Street meltdown.