Before I get to the letter I sent to my Congressional delegation, I want to discuss why the proposed bailout matters if you consider yourself a friend of science.
It’s very simple: if we sink $700 billion or more into propping up brokers you can kiss any science-related initiatives goodbye. No increases in certain basic research areas. No increases for public health. No research and development of green technologies. None of the things that a bunch of ScienceBloglings are talking about here. Instead, it all disappears down the porcelain crapper.
There is no science fairy: the most vital science initiatives have always been federally funded (and for those who think private industry will pick up the slack, this only shows that you have never tried to get funding from private industry at any meaningful scale). So, unless you think getting fucked with your pants on to the tune of $700+ billion is a good thing, email your representative and senators, and tell them to block the Paulson bailout. I would advise being polite, but there’s a good argument for being furious and abusive too. Here’s my stab at a letter
I am writing to you to ask that you oppose the current financial bailout plan proposed by the Bush Administration. To give, once again, this administration a blank check will be disastrous for the country, not to mention profoundly foolish. There is an opportunity to solve the crisis that is far more equitable to the average citizen-not Wall Street-and that would also establish mechanisms that would make similar crises less likely in the future.
First, rather than bailing out mortgage holders and banks, any policy should focus on helping home owners, as the fundamental problem is not a ‘liquidity’ problem, but that lenders made foolish loans, and others created financial instruments and insurance products based on these loans. What the government should be doing is buying mortgages at a discount (most likely 60-70% of current value), and then reestablishing the face value of the mortgage at this value. If the property were to be sold, the government receives half of the profit, so that taxpayers receive the profits of the sale. This mortgage must be paid off on schedule, and not earlier, to prevent lenders from refinancing based on the property. Additionally, this new mortgage would be fixed to the property and would take precedence over all other mortgages attached to the property.
This policy would not reward the bad behavior of lenders and borrowers, while stabilizing housing prices. It would also give the American people a chance to recoup some of the expense of this bailout. At the same time, it would allow people to retain their homes.
Second, any bailout plan should be conditional upon and include a financial transactions tax of 0.25%, similar to that imposed in the UK. Much of this crisis stems from exotic transactions such as credit default swaps, options, and futures as well as stock sales of companies that profited from these financial instruments. The cost to the long term investor would be negligible, but a transactions tax would discourage short term speculative products, and also raise much needed revenue for the purchase of mortgages.
Third, this crisis demonstrates that greed should not be the organizing principle for the economy. To provide a disincentive for ‘get rich quick’ speculation, a 50 percent tax rate surcharge on incomes over $5 million and a 70 percent rate on incomes over $10 million should be instituted. Additionally, capital gains should be taxed as income, not at a lower rate. Someone will have to pay for this crisis: those who have gained the most from the run-up to this crisis should carry the greatest burden.
Fourth, citizens should not be subsidizing excessive CEO pay. Loopholes that benefit top executives should be abolished, such as deferring compensation offshore, placing a cap on the tax deductibility of salaries and other compensation, and revamping the standards for stock option accounting.
As a fourth generation Democrat and reliable voter, I am tired of the leadership of my party, as has happened so many times during the last eight years, once again placing the prerogatives of the powerful before the needs of the people.
I respectfully ask that you oppose the proposed bailout plan.
[Mike the Mad Biologist]