Op-Ed

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Jake Rubin 202.225.5665

Strong Medicine Can Cure Our Financial Crisis
by Congressman Steve Kagen, M.D.

December 8, 2008
There is no doubt; these are tough times for everyone.  Our economic challenges extend from boardrooms to our living rooms, and from the financial markets to every factory floor.  As our new federal government begins to take shape, our primary goal must be to restore confidence in capitalism as we begin to rebuild an economy that works for all of us – not just those at the top.

Our financial system is seriously ill, and only the strongest medicine can cure it.  As an independent-minded physician, I understand the healing process, which requires an accurate diagnosis and a comprehensive sequence of remedies.  Here’s my four-part prescription for restoring the health of our economy.

1. Higher-Wage Jobs to Resuscitate the Middle Class

Credit must become more readily available; every financial institution that accepted taxpayer money from the flawed Bailout Plan should be required to lend the money out, instead of sitting on it in their reserves.  Citigroup, Bank of America, JP Morgan Chase, and Wells Fargo took in $25 billion each from taxpayers; it is time for them to do the right thing and immediately loan the money to the ailing auto industry and small businesses.

Invest in America’s infrastructure; let’s generate higher wage jobs by rebuilding roads and schools, repairing bridges and exploring new technologies, which will make us stronger in the long haul.

End our dependence on oil; let’s invest in green energy initiatives such as my Cleaner Trucks For America proposal, which will generate thousands of new jobs by converting diesel engines to natural gas within the next three years.

Guarantee access to affordable health care for every citizen; our health care crisis is the single greatest fiscal problem we face.  When we lower costs for care, we will be reducing business overheads, cutting taxes and stimulating job creation.

2. Stabilize Housing Markets by Keeping Families in Their Homes

Federal Deposit Insurance Corporation Chairwoman Sheila Bair has developed a fiscally responsible plan to stabilize home prices and assist endangered homeowners.  It will prevent over 1.5 million home foreclosures by aiming $24 billion of the $700 billion bailout at a process designed to keep families in their homes at rates they can afford to pay.  It will stabilize housing prices without requiring additional taxpayer dollars.

To grow our economy and guarantee our way of life, we must maintain a strong manufacturing base.  I am working hard to enhance manufacturing across Wisconsin.  We must protect the thousands of hard working families whose jobs were taken away through no fault of their own because of unfair and unbalanced trade with China and corporations like the one who has refused to sell or run paper mills in Niagara and Kimberly.

3. No More Corporate Handouts

My feelings about the $700 billion Bailout Plan – not enough oversight - were confirmed on December 3rd when investigators at the General Accountability Office (GAO) issued a report saying that we do not know if the banks are lending the money out.  Instead, they are rewarding their CEOs or expanding their own fortunes by acquiring other banks and financial assets. Congress should refuse additional requests for bailout funds until proper oversight measures are in place. 

One of my responsibilities is to protect Wisconsin families who work hard and play by the rules.  To be fair, however, the federal government may wish to consider extending help to working families and small businesses, but only in the form of a loan or a hand-up - never a handout.

4. Restore Effective Regulation of the Financial Industry Worldwide

In the years leading up to the current financial breakdown, regulators repeatedly warned against increasingly “exotic” mortgages and urged banks to curb their risky practices.  But lobbyists stripped such common-sense guidelines out of bills at the behest of the same bankers who are now lining up to accept bailout money.  Central banks, like the U.S. Federal Reserve and European Central Bank, must begin to work together to enhance credit liquidity and restore inter-bank lending. 

These four essential remedies may be difficult to accomplish, but we have overcome greater challenges.  Let’s commit ourselves today to work together to restore public confidence in capitalism by stabilizing home prices, encouraging private equity to re-enter the markets and make loans more affordable for middle-class consumers and businesses alike.

Finally, political leaders at every level of government must agree to re-invest taxpayer revenues into our nation’s infrastructure.  Doing so will generate millions of new, higher-wage jobs, strengthen our national security and stimulate local economic growth. 

The challenge is real and the prescription is clear.  The sooner we begin to rebuild America, the sooner we will lead the way forward toward a lasting solution to the world’s financial crisis.

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