The budget crisis in California and most other states plus the bankruptcy and collapse of the US auto industry are signals that the United States and the world are sinking into an economic depression of awesome destructive power. Who should pay for this depression? Clearly the Wall Street, Chicago, and San Francisco bankers and speculators who caused the crisis must pay. There are limitations on what any state can do, but we here in California can and must take a stand for a real economic recovery. We must grab the attention of the corrupt Sacramento and Washington politicians and start to lead this country out of the crisis. We therefore demand:
1. No layoffs of state employees. Restore and maintain vital services at all costs. Maintain the electricity grid, police, fire, highways, public health, education, and restore water deliveries to California farmers. We solemnly remind Governor Schwarzenegger and all state officials that deliberately depriving civilians of food, clothing, shelter, and medical care under whatever pretexts constitutes a high crime against humanity under the Nuremberg precedents of 1945. Austerity measures that lead to needless deaths will be vigorously punished under these precedents.
2. 1% California Tobin Tax on derivatives and speculation. California needs revenue, but the average person is overtaxed already. The biggest untapped income stream in California is financial speculation. Most Californians pay almost 9% in a regressive sales tax, but bankers and hedge fund operators pay nothing, zero, nada, on their massive daily turnover of derivatives, options, futures, stocks, bonds, foreign currency, and other speculative paper. Surely these financial interests should pay their fair share to meet this crisis. We must therefore impose a Tobin tax or Securities Transfer Tax (STT) of one percent (1%) to be paid by the broker on all financial transactions in this jurisdiction. Bankers will howl and threaten to leave the state, but few will cut themselves out of the world’s eight largest economy. Another mass of largely untapped wealth is represented by the foundations. A special 10% surtax on the assets and endowment of all foundations in the state should be established for the duration of the crisis.
3. Stop all foreclosures on California primary residences, farms, businesses, transportation, and any other activity providing production or socially necessary services, for five years or for duration of this depression, whichever is longer. If you throw a family on the street, you go to jail. Human survival must take precedence over debt service claims, and only ongoing businesses pay taxes. Repayment obligations can be worked out after the depression has been defeated. Special emergency measures are needed to house families who have already fallen victim to foreclosure and who are now at risk in new tent city Hoovervilles across the state.
4. Set a 10% upper limit on California interest rates. To relieve pressure on debt-strapped families, we must revive anti-usury legislation. Before the Volcker era at the Federal Reserve, most states maintained an upper limit, generally about 10%, on all interest rates. This 10% limit must now be re-imposed in the context of a tough re-regulation of credit card practices. This will provide a much-needed respite for family budgets, which have too long been looted by predatory credit card and other lenders.
5. Operation Clawback for the TARP. Treasury Secretary Geithner and Federal Reserve boss Bernanke are in the process of transferring an incredible $13 trillion in public funds to zombie banks and bankrupt financial companies as part of a doomed effort to prop up the doomed $1.5 quadrillion derivatives bubble. The California Attorney General must take the lead in mobilizing state governments across the country to demand that the $700 billion bailout (TARP) be declared unconstitutional, clawed back from the derivatives financiers, and used to keep states solvent and maintain vital services. We must especially target the bailout money given to the bankrupt hedge fund AIG and then paid out to foreign bankers involved in AIG derivatives deals, including Société Générale of France and Deutsche Bank of Germany (almost $12 billion each); Barclays of Britain ($8.5 billion); and UBS of Switzerland ($5 billion). These $37 billion would go a long way towards fixing the California budget. Geithner has refused before the House Appropriations Committee to bail out cities and states. But if JP Morgan and Citibank are too big to fail, then California is too. If Geithner does not reverse course, the California congressional delegation must take the lead in impeaching Geithner. In the meantime, the California AG should start seizing the California assets of these foreign derivatives bankers and apply these funds to the state deficit.
6. Force the Federal Reserve to open a special 0% emergency Main Street lending window for productive businesses large and small, including farming, construction, manufacturing, infrastructure, scientific research, and mining, down to the local restaurant, supermarket, repair shop, taxi company, trucking firm, or dry cleaner. So far Bernanke has been offering cheap credit only to banks, hedge funds, insurance companies, credit card companies, and other non-productive interests. It is high time that useful production got access to no-cost federal credit to put people back to work. Such a program can represent the first step towards the necessary nationalization of the Fed. If Bernanke tries to sabotage this measure, he too should be targeted for impeachment. 6. Fight the depression by building an ultra-modern super speed north-south Pacific maglev railway from San Diego to Los Angeles and San Francisco and on towards Portland and Seattle. A coastal maglev line would be a permanent addition to the capital stock of our state, and an enhancement of the productivity of labor. China and Japan are building maglev, but the US has lagged behind, so California must take the lead in a pilot project for modern non-polluting mass transit in this country, getting our people out of the endless traffic jams on the freeway. If the Fed can be forced to issue the necessary loans, use those. If not, issue state bonds that average people can buy with the added perk that they can ride free on the maglev. Multiply the economic development power of the proceeds by setting up a state-owned California Development Bank to outflank the zombie bankers with 1% loans for in-state high-tech productive infrastructure only, starting with the Pacific maglev. Get control of the California auto plants idled by GM, Chrysler, and Ford and reconvert them to build equipment for the maglev line, putting jobless auto workers back to work. Then sell California maglevs worldwide.
7. Bankers and politicians can choose between cooperating with these reasonable measures and a general debt moratorium or payment freeze on all bonded debt of the state. If we have to choose between payments to bondholders and the lives and welfare of California residents, we will not hesitate. After the Jackson-van Buren Panic of 1837, New York, Pennsylvania, Michigan Mississippi, Arkansas, Florida, and Louisiana all defaulted, and they all seem to have survived. California will too. Our wealth is in our world-class trained work force, not our credit rating.
8. General strike based on this program against Schwarzenegger and any other politician proposing layoffs or cuts in vital services. California still has militant unions among teachers, nurses, and other public employees, but if they do not fight now, they risk being crushed in the depression. It is time for the labor movement and its allies to take up this struggle with mass strikes which all persons of good will are called to join. Any politician refusing to fight for these demands, starting with Pelosi, Boxer, and Feinstein, should be ousted.