A new era

October 1, 2008
Rutland Herald Editorial

Rep. Peter Welch may not get all he wants from a new bailout package, but it appears the nation is heading in his direction.

For all but diehard conservatives, doing nothing in the present crisis is not an option. Yet Welch and some fellow liberals voted with the conservatives to do nothing in that historic vote on Monday. His principal objection was that the bill specified no source of the money to be doled out to foundering financial firms. So Welch feared that, as usual, the middle-class taxpayer would get stuck with the bill.

Welch is among those who refused to support the bailout because they wanted to pin the costs on someone other than the taxpayer. Welch mentioned a plan to create a financial stabilization account paid for by a small transaction fee on security trades — a tax on Wall Street to help save Wall Street.

Sen. Bernard Sanders went further. He proposed a five-year, 10 percent surtax on those with incomes more than $500,000 or on couples with incomes of more than $1 million. He also proposes re-regulating the financial services industry and breaking up companies that are too big to fail.

Even if a bailout bill passes without these measures, it is likely the country is far less resistant to higher taxes on the wealthy than it was a week or two ago. And that may be one reason that Barack Obama's lead in the polls is widening day by day. Obama's tax plan already included a provision to end President Bush's tax breaks for the wealthy. With the American taxpayer potentially on the hook for $700 billion because of risky business on Wall Street, higher taxes on the wealthiest among us, either in the form of transaction fees on Wall Street, tax surcharges, or an end to tax breaks, seems to be a logical next step.

Even if John McCain were elected, it is hard to see how he could govern in the present circumstances. That hard core of House Republicans who cling to the old anti-tax, anti-regulation faith will no longer be able to anchor a governing coalition. The direction of the public is against the profiteering that has endangered the economic well-being of millions of Americans and caused millions already to be thrown out on the streets.

Americans are horrified by the bailout because it looks like more loot for those who have already looted the nation. The bailout plan was structured so as to protect the taxpayer, but populist fervor is high and for the first time in decades the kind of rhetoric Franklin Roosevelt deployed against what he called "economic royalists" and greedy speculators has forced even John McCain to portray himself as a populist.

Those House Republicans who blocked the bailout may have unwittingly helped bring about a bill even more objectionable to them. It is likely the House leadership will include additional homeowner protections or other measures to mollify the likes of Peter Welch, plus a token gesture toward the conservatives. But events are pointing in the direction of policies favored by Barack Obama and Peter Welch. We are at the dawn of a new era.