Did America Get Punk'd on the Bailout?

By David Sirota, Campaign for America's Future. Posted December 18, 2008.

So what to do?

First things first -- we have to pressure, cajole, lambaste and downright humiliate Wall Street stooges on Capitol Hill who claim nothing can be done. These are people like Sen. Chuck Schumer, D-N.Y.. The recent subject of a scathing New York Times profile examining his complicity in the financial crisis, Schumer insisted to the Wall Street Journal that despite Congress' clear power to reform -- or even revoke -- the bailout, "there's not much we can do other than jawbone." It's the old Innocent Bystander Fable, designed to make us think Congress can do nothing other than keep forking over the money to campaign contributors. And it's a straight-up lie.

Second, Congress can reject the Bush administration's request to release the next $350 billion installment of no-strings-attached bailout money for Wall Street, if that request happens.

Third, Congress can add all the strings and oversight measures to the remaining money that bailout critics originally said were necessary. That means eliminating gaping loopholes in the executive pay limits; preventing the money from subsidizing shareholder dividends, forcing the government to buy voting shares of bank stock (rather than nonvoting stock, as it is doing today) so that regulators have the leverage to clean out bad bank management; following Britain's lead in making the money contingent on increased lending; and expanding the ways the money can be used so that it can be allocated to the real economy (i.e. manufacturing companies, etc.).

Finally, Congress can allocate the unspent bailout money to a robust economic-recovery package focused on job-creating infrastructure and health care priorities -- and Congress can pass that economic recovery package right now, rather than waiting for the next president.

Looking at what's gone on in the last three months, we see a classic example of Naomi Klein's "shock doctrine" and subsequent disaster capitalism. Bailout critics were attacked as "irresponsible" by Establishment pundits and politicians -- even though the data showed that those pundits and politicians were using an admittedly real problem to manufacture the perception of a full-on earth-shattering crisis so as to justify the biggest taxpayer heist in contemporary American history. And though that data was largely ignored by the same media that beat the drum for the bailout, it is now becoming too compelling to ignore.

As the real economy is ignored by Washington, and as the government's own numbers expose the shameless dishonesty of the Beltway's bailout proponents, it's time for our leaders to listen to the real pragmatists, who have been right all along.

See more stories tagged with: credit crunch, bailout, financial crisis, paulson plan

David Sirota is a best-selling author whose newest book, The Uprising, was released this month. He is a fellow at the Campaign for America's Future and a board member of the Progressive States Network -- both nonpartisan organizations. His blog is at www.credoaction.com/sirota.

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