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Alan Grayson on the $700 Billion Wall Street Bailout

Statement on September 30, 2008

Thank you to so many of you, for writing to share your thoughts on the proposed Wall Street bailout.  As we work our way through your comments, we wanted to offer a few more observations of our own.

Carl Sagan, the famous American scientist, often said that "extraordinary claims require extraordinary proof."  We are now being told that if taxpayers don't fork over $700 billion to Wall Street bankers who made bad choices, then "credit" (mortgages, car loans, business loans, etc.) will disappear.  That is a really, really extraordinary claim.  It requires extraordinary proof.  Where is that proof?

We have never done anything like this before, even during the Great Depression.  Since the Federal Reserve was created, whenever there was a need to ease credit, the Federal Reserve lowered interest rates and bought bonds for cash, thereby "injecting" liquidity into the financial system.  Just yesterday, the Federal Reserve did this, to the tune of over $600 billion.  Where is the evidence that these tools, which have worked for almost a century, suddenly are broken?  And if they are, then how did that happen?

Credit relies up the ability of intelligent, hard-working people to pay back that credit.  Americans are just as intelligent and hard-working now as they were last month, and last year.  Why, then, should we now suddenly fear that credit disappear?

Since this bailout would be financed with debt, we would be more than doubling the federal deficit this year, and burdening every man, woman and child with over $2000 to pay back.  That's over $15,000 for my family alone.  Because these are troubled times, I'm not anxious to do that.

It's worth noting that the people who are telling us that we must spend $700 billion of our money to avoid the collapse of credit are the same people who told us that there were weapons of mass destruction in Iraq, which would be used against us.  The same people who surveyed the wreckage of New Orleans after Hurricane Katrina, and said that FEMA was doing "a heckuva job."

We are often reminded that we live in a free market system.  That certainly does not mean that the taxpayers are the suckers of last resort.  It seems as though the free market's "invisible hand" has been balled into a fist, and that fist is about to punch you and me in the face. 

We all agree that the credit markets need to function properly.  And we are still waiting to see the proof that dumping $700 billion in worthless assets on the taxpayers is necessary for that to continue.

"In the last two days, the U.S. stock market has gone up by $1 trillion. That's because of a $700 billion direct transfer from taxpayers to financial corporations like AIG and the expectation that another $300 billion will find its way into the deal before it's over. So tax dollars are being used to prop up the stock market, something that never happened even in the deepest depths of the Great Depression. It's corporate communism. That's the context.

"Here is more context. $700 billion is over $2,000 for every man, woman and child in America. For a family of seven, like mine, it's over $15,000. Someone just took $15,000 from me and my family, and gave it to anonymous bond holders whom I've never met, who have done nothing for me, to whom I owe nothing and -- right now -- I really don't like.

"More context: you could take one percent of that amount -- one percent! -- and pay off the delinquency on every home mortgage in arrears in America. And keep people from losing their homes. But ordinary people get nothing from this Administration except grief."

Alan knows first-hand what it's like to start off at the bottom rung of the ladder and climb up through hard work and perseverance. Alan grew up in "the projects" in the Bronx.  He heard the squeal of the wheels of the elevated trains, every five minutes, all day and all night. After excelling in high school, Alan was accepted to Harvard, where he cleaned toilets and worked as a night watchman to help pay his way through college. He graduated in three years, with high honors. He then went on to start a business, IDT Corp. Today, IDT is a Fortune 1000 public company, with $2 billion a year in sales. Alan took his profit from IDT, and invested it in many other small companies. Today he owns between one and ten percent of a dozen different public companies. He has also persevered in the fight against war profiteers who have defrauded our troops and the taxpayers.

As your Congressman, Alan will work to:

• Provide tax breaks for the people who need them the most -- middle-class and working-class families
• Take on abusive and predatory lenders
• Raise the minimum wage
• Strengthen labor laws and enforce workplace protections
• Provide universal health care for all Americans
• Provide paid vacations, paid holidays, and sick leave for all working Americans
• Make college more affordable by increasing federal financial aid
• Provide job training and re-training opportunities

What does this mean for you?

You will have someone in Congress looking out for your best interests, not the interests of big business and the financial industry.

You will have protection against lenders who are deceptive in their terms and charge outrageously high interest rates.

You and your family will have opportunities to increase your savings for emergencies, college, and retirement.

You and your family will enjoy access to the benefits that employers give to themselves - quality health care, paid vacations, paid holidays, and sick leave.

On November 4, send a clear message that the Republicans have failed Americans and Central Floridians by weakening the economy and ignoring the needs of the middle class. Vote for Alan Grayson for Congress.

Elect Alan Grayson to Congress. Imagine the possibilities -- and help make them happen!