bysiewicz accountable plan

8/3/2019 Bysiewicz Accountable Plan

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Paid for by Susan Bysiewicz for Connecticut, Inc.

Watch the videos, learn more, and get engaged at http://www.susansplan.com


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Executive SummaryThe middle class is facing an economic calamity in America. Corporate special interests, WallStreet, and their Republican allies are largely the cause and the impediment to change. Its timethat Congress listened to the middle class and held Wall Street and the corporate special interests

accountable.

My plan will do just that. It makes Wall Street repay some of the money they made on the backsof the middle class through high-risk gambling, and it uses these funds to help homeowners whohave been dragged down in the economic disaster Wall Street created.

It also returns our focus in this country to the middle class: giving them the tax breaks, not thebig corporations, and giving them the loudest voice in Washington, not the special interests,lobbyists, and incumbent Members of Congress who exist in a cozy Washington cocoon.

And it gets our focus back to creating jobs, opportunity, and security for the middle class in this

country: through a real energy plan that will create millions of jobs in clean American energyand free us from foreign energy supplied by our enemies; by realigning our military strength to asmarter posture that meets the needs of the 21

stcentury; and by putting in place a coherent plan

on immigration that is fair to American taxpayers, practical, and lasting, and can create millionsmore jobs and higher wages for Americas.


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Components of the Accountability Plan

Hold Wall Street Accountable: Wall Street banks committed fraud by selling sub-primemortgage derivatives at the same time they were betting against those derivatives with creditdefault swaps. They took outrageous risks on highly leveraged bets. That cost taxpayers

hundreds of billions of dollars and brought our economy to the brink of collapse. We shouldmake Wall Street repay this money through a transaction tax on short term high volume tradingthat harms normal investors. With these funds we can provide mortgage relief to middle classfamilies whose homes are worth less than they owe. ApproximateNet Cost/Savings over TenYears: saves $1.4 trillion

End Corporate Welfare: We need to end corporate welfare by eliminating all special interest taxbreaks and the hedge fund loophole that allows speculators to pay a lower tax rate than themiddle class. We also need to get end the Bush tax cuts for the wealthy and fix the AlternativeMinimum Tax that makes many middle class families pay a higher tax rate than the wealthiestAmericans.ApproximateNet Cost/Savings over Ten Years: saves at least $1 trillion

Real Reform in Washington No More Half Measures: There should be a permanent ban onearmarks; no more contributions, bundling, or gifts from lobbyists; public disclosure of allmeetings with lobbyists; a five year ban on Members of Congress and staff from becominglobbyists; a constitutional amendment to prevent campaign donations from corporations;independent commissions to draw Congressional districts; and a ban on campaign-style mailfinanced by taxpayers.ApproximateNet Cost/Savings over Ten Years: no net costshowever,real reform that reined in lobbying and corporate influence would likely eliminate a significantamount of wasteful spending and lobbyistdriven pork, and result in substantial savings.

Energy Independence: There is only one way to achieve energy independence: more

renewable energy, much more. The United States spends over a billion dollars on foreign oilevery single day. This accounts for well over half of our trade deficit, and 40 percent comesfrom dangerous and unstable countries. Our electricity comes largely from coal, which willonly increase in cost over time. In addition it also drives up health care and environmentalcosts. We should have a national policy to provide Clean Energy Contracts for clean,renewable, American energy. This would be a major part of the solution to free us from thesefossil fuel sources, and would create millions of jobs and billions of dollars of economicgrowth.ApproximateNet Cost/Savings over Ten Years: costs $450 billion

Reduce Troop Levels Abroad: While America needs to continue funding our fight againstterrorism, we should immediately bring our troops home from Iraq and Afghanistan, and many

of our forces from Europe and Japan. Doing so will allow us to reduce the defense budget andalign our military posture to the real needs of the 21 st century. We can replace much of ourworldwide capacity to project power and protect our interests abroad through increased navalstrength, and realize savings from bringing our troops home.ApproximateNet Cost/Savings overTen Years: no net costs, likely substantial savings


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Immigration Reform: Give illegal immigrants already living here a path to legal status, orcitizenship for those who have been here longer and are established in their communities, as longas they have a job and pay taxes. Expand legal immigration by allowing students from foreigncountries who go to college in the United States to stay here and work, and allow temporaryforeign workers for jobs that go unfilled by legal residents -- though those jobs must be posted

for Americans to seek employment first. We can grow our economy while ensuring theAmerican dreams remains open to all. ApproximateNet Cost/Savings over Ten Years: saves $50billion

Taken together, this plan gets our focus back onto the middle class. It would make sure that themiddle class gets all of the fairness, opportunity, help, and voice in our country that they deserve.And it would generate millions of new jobs in America, improve our security, and actuallyimprove our debt by about $2 trillion over ten years.

Plan Component Net Cost/SavingsHold Wall Street Accountable Saves $1.4 Trillion

End Corporate Welfare Saves $1 Trillion

Real Reform in Washington No Net Costs

Energy Independence Costs $450 Billion

Reduce Troop Levels Abroad No Net Costs

Immigration Reform Saves $50 Billion

Total Saves $2 Trillion


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Table of Contents

Holding Wall Street Accountable WhileHelping Middle Class Homeowners

Page 5

Ending Corporate Welfare and BushTax Cuts for the Wealthy, Helping theMiddle Class

Page 11

Real Reform in Washingtonthe KindThey Wont Like

Page 15

Supporting Clean American Energy Page 21

National Defense: Smarter and Stronger Page 27

A Fair, Lasting, and Practical Solutionon Immigration

Page 31


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Holding Wall Street Accountable While Helping Middle Class Homeowners

It is time to hold Wall Street accountable for the damage they have done to the American people- to our jobs, our economy, and the very homes we live in. Wall Street banks committed fraud byselling sub-prime mortgage derivatives at the same time that they were betting against those very

derivatives with credit default swaps. They gambled on highly leveraged bets, knowing that itwas only a matter of time before it all fell apart, but hoping they could make a quick buck andget out of the way in time. Instead, middle class families were the ones left to foot the bill whenthe music stopped.

That greed and recklessness cost taxpayers hundreds of billions of dollars and brought oureconomy to the brink of collapse. The housing market has been the epicenter of this calamity forthe middle class. Home prices have declined one-third in the last 5 years, with a total loss ofhome equity of $6.6 trillion. That has led to almost 15 million homeowners owing more on theirmortgages than their homes are worth, 3.5 million homes in the foreclosure process, and 6

million people who have already lost their homes.i More than 100,000 Connecticut residents are

underwater or nearly underwater on their mortgages today.ii

Wall Street caused this pain. Wall Street should finally be held accountable, and they should payto help the people who have been hurt. We can accomplish this in two steps: first, rein in thegambling behaviors on Wall Street and, second, make them repay the money they cost taxpayersby providing relief to middle class families whose homes are now worth less than they owe.

Step One: A Transaction TaxA financial transaction tax is a very small tax on each trade of a financial asset, like a stock or abond. Many prominent economists, business heads, and financial sector leaders of all politicalstripes have called for a transaction tax over the years. After the 1987 Wall Street crash, Senator

Bob Dole and the first President Bush endorsed it; after the collapse of 2007, the New YorkTimes highlighted it as a top idea of 2008

iii. Now its time to implement it.

A transaction tax on Wall Street would achieve several important goals.. The first major benefitis that it puts the brakes on Wall Street gambling on short-term, high volume trading by makingit more expensive to do many small, speculative trades every day. As Nobel Prize-winningeconomist Paul Krugman has pointed out, this kind of trading is not performing any valuablefunction for our economy, either by putting capital to productive uses or by hedging againstlong-term financial risksit is simply allowing big banks to engage in casino-style gambling.Furthermore, Wall Streets reliance on churning through these kinds of short-term bets was acritical factor in the recent financial crisis, and it is clear that slowing down this activity could

help prevent a future crisis.

iv

A transaction tax would, as Nobel Prize-winning economist JamesTobin said, throw some sand in the well-greased wheels of speculation.v

A transaction tax is also fair because it makes Wall Street pay more of its fair share. This is anindustry that handles a minimum of $50 trillion worth of transactions in a year. Goldman SachsGroup gave out $16.7 billion in bonuses for one year, even in the midst of the Great Recession.As John Bogle, Founder and retired CEO of the Vanguard Group, has said about the fairness andthe economic benefit of a transaction tax: The financial institutions that control 75 percent of all


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stocks are tax free. Pension funds are tax-free. Mutual funds are about half tax-deferred, but theother half is run by managers who pay no attention to taxes. So weve got these two giantindustries basically operating without any frictional costs when they trade stocks back andforth and that helps explain why weve had this orgy of speculation. No question about that.So I like the idea of a transaction cost [tax].vi

The other major benefit of a transaction tax is that it holds Wall Street banks accountable bymaking them pay back a part of the money they have made, some of it through their reckless andcriminal behavior. A very moderate transaction tax is estimated to produce at least $150 billionin annual revenue, and quite possibly more.

viiIn this time of fiscal austerity, we can use these

funds aggressively to help Americans in need and restore economic stability.

Therefore, we should adopt the plan developed by economists Dean Baker and Robert Pollin:under this plan, we would put in place tax rates on Wall Street trading at 0.5 percent on atransaction, or 0.25 percent on each side, for stocks and equities; 0.02 percent on bonds; 0.5percent on options; 0.01 percent on foreign exchange spot transactions; 0.02 percent on each

transaction in futures and forwards; and 0.015 percent on swaps.

viii

To ensure fairness toinvestors, we should adapt the plan slightly to exempt tax-favored retirement accounts, whichshould still allow revenue of $150 billion.

It is worth noting that big Wall Street banks that oppose a transaction tax have made severalarguments against itbut none of them hold water. One argument is that in a world of mobilecapital, if you tax financial transactions, either the tax could not be enforced or the capital willsimply go elsewhere. This flies in the face both of logic (as argued by several experts

ix) and

experience. The fact is that a securities transfer tax previously existed in the U.S. between 1914and 1966, and we built up extremely healthy financial markets.x The U.K has had a tax on stocktrades for decades, and the U.K.s volume of trading has grown robustly with no sign of capital

fleeing for other markets.

xi

In fact, as the IMF has pointed out, many G-20 countries currentlyimpose some sort of financial transactions tax in the same range as what is proposed here.xii

Clearly, a transaction tax is both enforceable and consistent with a healthy market.

Another argument is that Wall Street banks will just pass the cost of the tax on to averageinvestors. This is also a misdirection. Such a tax would make little difference to those peoplewho want to hold stocks as a long-term investmentthe tax overwhelmingly impacts thosewho make lots of trades in high volume, which is very rarely the small investor.

Third, and perhaps most importantly, as argued last year in the Wall Street Journal, while it istrue that a transaction tax could raise costs slightly for those who invest in mutual funds, one ofthe benefits of a transaction tax is that it pushes investors away from managed funds like mutualfunds into cheaper index funds, which most experts believe are better for small investors andwhich actually perform better than the more expensive managed alternatives.xiii And Wall Streetfirms, while decrying the cost to investors of a potential transaction tax, actually support a feethat has an even larger impact on costs to investors and which the firms simply use to markettheir (less effective) managed funds.xiv


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So, lets be clear: when Wall Street banks protest their concerns for the small investor, they areusing a fig leaf to obscure their real concern about their profitable high-volume, short-termtrading business, and they could help small investors simply by lowering their own fees. Andagain, under this plan, we exempt tax-favored retirement accounts.

Step Two: Making Wall Street Pay to Help HomeownersThe middle class is being crushed inside an iron triangle of rising debt, high unemployment, andshrinking assets: American student loan debt is over $1 trillion, unemployment has stayed at orabove nine percent in Connecticut since December 2009, and household wealth has fallen by$7.7 trillion since the start of the recession.

xv

By far the biggest cause of economic pain, and the keystone of the economic crisis, has been thehousing market implosion. With the one-third decline in home prices, almost 15 millionhomeowners are now underwater. Six trillion dollars of the loss of household wealth has comefrom the decline in home values. So any solution to our economic crisis must address themortgage debt problem.

While there are many steps we could take to help homeowners, by far the most effective wouldbe to reduce the amount of principal that people who are underwater have to pay on theirmortgages. As the New York Times recently wrote:

the economy will not recover until housing recovers - and that won't happen without arobust effort to curb foreclosures by modifying troubled mortgage loansreducing

principal is a better solution than lowering interest rates, because it reduces payments andrestores equity. Bankers resist, because it could force them to recognize losses theywould prefer to delay. The administration has resisted, in part because principalreductions are seen as rewarding reckless borrowers. But many of today's troubledborrowers were not reckless. Rather, they are collateral damage in a bust that has wipedout equity and hammered jobs, turning what were reasonable debt levels into unbearable

burdens.xvi

Paying off some of the principal for homeowners who are underwater will help to relieve thepressure from each side of the iron triangle: it will lower the debt overhang on the middle class,increase equity and reduce foreclosure to preserve Americans financial assets, and relieve cash

flows for households which will enable them to resume spending and lower unemployment. It isthe most important thing we can do to take our country out of the downward spiral in housingthat has prevented a real recovery and to boost consumer spending and confidence. It is alsoespecially fair in Connecticut, which has one of the healthiest ratios in the country of outstandingloans to home values, meaning that Connecticut homeowners did not seek a lot of recklessloans.xvii

We should therefore use the funds from holding Wall Street accountable to help homeownerswho are underwater by paying down principal. Wall Street caused this problem, and Wall Streetshould pay for it.

Mortgage Principal Reduction


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We should create a program, based on the Homeownership Vesting Plan, invented by notedeconomist Mark Zandi to reduce principal and get homeowners above water.xviii In this plan,qualifying homeowners would have their mortgages split into two pieces:

A 30-year, fixed-rate FHA-insured loan with a balance equal to 97.5 percent of the

homes current appraised value. A non-amortizing, no-interest loan from the Treasury, with a balance equal to the

difference between the homeowners original loan amount and the new FHA loan.

In other words, there would now be one loan for the actual current value of the house (or justbelow at 97.5 percent) and a separate loan for the added amount of what the house used to beworth (which is also the amount that the homeowner is under water). The paydown mechanismthen becomes relatively simple. The homeowner makes regular mortgage payments on his or hernew FHA loan reflecting the current value of the house. For each year that the homeowner stayscurrent on the FHA loan, a fifth of the balance owed to the Treasury on the other loan would bepaid off out of the funds generated by the transaction tax on Wall Street.

Thus, after five years of making their mortgage paymentsand on a much more fair amountthat is just under the real current value of their homea homeowner would have the secondloan paid off for them, and would have only a reasonable, affordable FHA loan going forward.The original mortgage owner would then own a new FHA loan, and would get a payment fromthe Treasury (paid for by the Wall Street funds) equal to the difference between the original loanamount and the FHA loan. If the homeowner defaulted on the FHA loan during the five-yearvesting period, the non-vested portion of the Treasury loan would be repaid first; then themortgage owner would receive the remainder of the foreclosure proceeds.

In order to give an incentive to mortgage services to handle the administrative costs of putting

this plan in place, they would receive $1,000 for each loan modified in this way. This isimportant because mortgage servicers usually lack incentives to modify loans: most agreementsusually call for a modification to occur only if it is in the best interest of the investors in thesemortgage-backed securities, and those calculations are extremely complex. This has been a majorimpediment to getting modifications done.

Another impediment to modifications has been that during the housing bubble, two-thirds ofsubprime loans had piggyback second mortgages, which allowed them to avoid paying private

mortgage insurance. The problem is that second mortgage owners can now veto anymodification. Their lien may be essentially worthless, since house price declines have more thanwiped out their interest in the home, but they still must be paid something to obtain their consent.

So, under the Homeownership Vesting Plan, second-lien holders are given twenty-five cents onthe dollar to get out of the way of the modification. This removes a major obstacle by givingthese lien holders some value that they can recapture, so it represents a win-win for everyone.

The Homeownership Vesting Plan applies to mortgages for owner-occupied residences that wereoriginated between January 1, 2003 and December 31, 2007, had original loan amounts belowthe current FHA loan limit, were unaffordable at origination, as defined by a front-end, debt-to-income ratio exceeding 30 percent, and a cumulative loan-to-value ratio of over 90 percent, meet


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the current underwriting criteria of the FHA Secure program, and for which the homeownerowns no other residences.

Zandi originally estimated that 3.75 million homeowners would qualify for this plan. And whilethe difficulties of contacting troubled homeowners and various impediments common to all loan

modification plans might decrease the number who actually participate, it is clear that using thisplan, we could still help millions of Americans who are struggling.

Updating the original cost estimates for todays figures yields a program cost of approximately

$120 billion, including the costs of paying down the underwater principal through the Treasuryloans and the 2.5% that serves as a down payment on the modified FHA Secure loans. It alsoincludes the incentive payments to mortgage servicers and second-lien holders and alladministrative costs and interest.

Zandi estimated that even if only half of the qualified homeowners were included in the originalplan, it would prevent 1.7 million loan defaults, forestalling a decline of 6 percentage points in

home prices, and preserve $1.1 trillion in household wealth. This would in turn stabilize thehousing market and generate a tremendous amount of greater potential consumer spending in oureconomy to improve economic growth.

Summary and Conclusion

Home prices have declined one-third in the last 5 years, there are almost 15 millionhomeowners underwater, 3.5 million homes in the foreclosure process, and 6 millionpeople who have already lost their homes. We must address this economic calamity forthe middle class to have any hope of economic recovery.

A small tax on Wall Street trades would have three major benefits: slow down the casino-style high-volume trading that helped lead to the financial collapse; create more fair

taxation for an industry that handles $50 trillion in transactions annually; and hold WallStreet banks accountable by generating $150 billion each year to help homeowners andour economy.

Reducing principal on mortgages is the most important thing that we can do to helphomeowners and turn the economy around, because it will slow foreclosures, stabilizehousing prices, keep millions of Americans out of financial turmoil, and free homeownercash-flow to boost consumption.

We should adopt an adapted version of the Zandi plan to pay down the principal forqualified homeowners. This could directly help millions of homeowners, and indirectlyhelp millions more by stabilizing home prices and keeping them above water.

We easily can pay for this plan with the transaction tax on Wall Streetthe total plan is

estimated to cost $120 billion.

Enacting these proposals would provide relief to millions of middle class homeowners who arein trouble through no fault of their own, reverse the downward spiral in housing prices that issapping our chance of a real recovery, boost consumer spending to fuel economic growth, andrein in some of the worst behavior on Wall Street that led to the collapse. And it would do all ofit under one simple principle: Wall Street created this mess, and now Wall Street should be heldaccountable and pay to fix it.


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i NY Times Editorial, August 21, 2011

ii http://blogs.courant.com/rick_green/2011/11/underwater-over-100k-ct-homeow.html

iii http://www.cepr.net/documents/fst-facts-myths-12-10.pdf

iv New York Times Editorial, November 27, 2009v New York Times Editorial, November 27, 2009

vi http://www.cepr.net/documents/ftt-support.pdf

vii http://www.cepr.net/documents/publications/ftt-revenue-2009-12.pdf

viii http://www.cepr.net/documents/publications/ftt-revenue-2009-12.pdf

ix http://www.americanprogress.org/issues/2009/11/wall_street_tax.html

x http://www.cepr.net/documents/ftt-support.pdf

xi http://www.cepr.net/documents/fst-facts-myths-12-10.pdf

xii http://www.imf.org/external/pubs/ft/wp/2011/wp1154.pdf

xiii http://online.wsj.com/article/SB10001424052748704381604575005562735357750.html

xiv http://online.wsj.com/article/SB10001424052748704381604575005562735357750.htmlxv http://money.cnn.com/2011/06/09/news/economy/household_wealth/index.htmxvi

NY Times Editorial, August 21xvii

http://www.corelogic.com/downloadable-docs/corelogic-q4-2010-negative-equity-

report.pdfxviii

This plan and the discussion of its contents is found in Homeownership Vesting Plan by

Mark Zandi, www.economy.com, Regional Financial Review / December 2008.
http://www.cepr.net/documents/fst-facts-myths-12-10.pdfhttp://www.cepr.net/documents/ftt-support.pdfhttp://www.cepr.net/documents/publications/ftt-revenue-2009-12.pdfhttp://www.cepr.net/documents/publications/ftt-revenue-2009-12.pdfhttp://www.americanprogress.org/issues/2009/11/wall_street_tax.htmlhttp://www.cepr.net/documents/ftt-support.pdfhttp://www.cepr.net/documents/fst-facts-myths-12-10.pdfhttp://www.cepr.net/documents/fst-facts-myths-12-10.pdfhttp://www.cepr.net/documents/ftt-support.pdfhttp://www.americanprogress.org/issues/2009/11/wall_street_tax.htmlhttp://www.cepr.net/documents/publications/ftt-revenue-2009-12.pdfhttp://www.cepr.net/documents/publications/ftt-revenue-2009-12.pdfhttp://www.cepr.net/documents/ftt-support.pdfhttp://www.cepr.net/documents/fst-facts-myths-12-10.pdf


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Ending Corporate Welfare and Bush Tax Cuts for the Wealthy, Helping the

Middle Class

Somewhere along the way, things have gotten seriously off track in this country. The middleclass is getting hammered by falling incomes, unemployment, and a collapsed housing market.

As a result, the average American family actually got poorer in the last ten years.xix At the sametime, corporations are sitting on almost $2 trillion in cash reserves, the oil and gas industry alone

has made $1 trillion inprofits in the last decadexx

, and Wall Street banks made a $29 billion

profit in just the first quarter of 2011.xxi

Wealthy individuals are also doing just fine. The median bonus for S&P 500 company CEOs

last year was $2.2 million,xxii

the top 10 percent of Americans now get about half the income in

this countryxxiii

, and due to the Bush tax breaks and years of loopholes creeping into the system,the wealthiest Americans now pay an average of only 17 percent in taxes, down from 26 percent

twenty years ago. xxiv And, of course, our federal government has a $1.5 trillion deficit this yearand Republicans in Congress want to balance it entirely by eliminating any vestige of

progressive government.

The solution should be simple: we need to end corporate welfare by eliminating all specialinterest tax breaks, and especially get rid of the hedge fund loophole that allows extremelywealthy Wall Street money managers to pay a lower tax rate on their pay than the middle class.We also need to get rid of the Bush tax cuts for the wealthy and fix the Alternative MinimumTax that makes many middle class families pay a higher tax rate than the wealthiest Americans.We need to make taxes fairer and make the middle class the priority again.

Corporate WelfareMany corporations have not only avoided paying any federal income taxes in recent years, but

have actually received huge refunds.xxv In fact, in 2005, 25 percent of large corporations paid noincome taxes while making $1.1 trillion in revenue.

xxviOver the last three years, sixty-seven of

the largest companies in America paid an average of zero dollars in taxes and thirty of them got

significant refunds.xxvii Overall, a group of the 280 biggest, most profitable corporations in

America got $224 billion in tax subsidies.xxviii

Closing down all of the loopholes that these corporations and their well-paid lobbyists haveinserted into the tax code over the years would save hundreds of billions of dollars.

We could get back $100 billion every year by putting an end to big companies and thesuper-rich sheltering their profits in offshore tax havensincluding $2 billion of taxburden that is shifted onto Connecticut taxpayers that these companies would otherwise

owe.xxixxxx

Much has been made of the tax breaks that the oil and gas industry gets, and we shouldchoose right now who is more deserving of the $35 billion they will get over the next

decade: this industry or middle class taxpayers.xxxi

Big corporations, especially giant agribusinesses, get huge windfalls from the ethanol tax

break, which costs taxpayers $5 billion a year.xxxii
http://dealbook.nytimes.com/2008/08/13/study-tallies-corporations-not-paying-income-tax/http://dealbook.nytimes.com/2008/08/13/study-tallies-corporations-not-paying-income-tax/http://dealbook.nytimes.com/2008/08/13/study-tallies-corporations-not-paying-income-tax/http://dealbook.nytimes.com/2008/08/13/study-tallies-corporations-not-paying-income-tax/


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Corporations write off entertaining clients in luxury skyboxes and other entertainment,

costing $5 billion per year.xxxiii

And of course, it is ludicrous to continue the loopholes in the tax code that rewardcompanies that ship jobs overseas while disadvantaging companies that keep Americansemployed here at home.xxxiv

Our tax code is riddled with a host of other tricks and benefits for corporations. Most are formature and profitable industries that do not need the help, and none of them it help the middleclass. As just a small sample, we can eliminate special tax breaks for coal, timber andagribusiness, along with smaller but equally ridiculous giveaways for owning racehorses, buying

corporate jets, renovating NASCAR racetracks, and operating luxury cruise ships. xxxv

Carried Interest: the Hedge Fund LoopholeExecutives of investment fundsincluding big hedge funds, private equity firms and venturecapitaliststake a portion of a funds investment gains as compensation, which is known ascarried interest. Right now, carried interest is taxed federally at 15 percent for capital gains

a rock bottom rate set by the Bush tax cutsunlike regular income for the kind of work thatmost people do, which can be taxed as high as 35 percent.

xxxvi

This makes no sense to economists who have studied the matter, like University of Colorado

professor Victor Fleischer,xxxvii

and it also flies in the face of fundamental fairness to middle classtaxpayers like police officers or teachers who pay more in taxes than these Wall Street titans.Taxing carried interest as ordinary income could generate more than $10 billion in tax revenue

per year.xxxviii

Ending the Bush Tax Cuts for the WealthyThis is long overdue, plain and simple. Ending the Bush tax cuts for the wealthy would save

$830 billion over the next ten years. It would impact just the richest two percent of Americans,who already hold a disproportionate and growingpercentage of the nations wealth.xxxix It is fair.And it is time.

Helping the Middle ClassSince the middle class has been so badly hammered by the recession, it is important to provide asmuch help as we can to keep Americans on their feet. We should protect current tax rates forthe middle class. We should also extend the payroll tax holiday enacted last year for anadditional year to help keep more income in peoples pockets and to boost consumer spendingand help our economy. And we should defend the tax exclusion for employer-sponsored healthcare from Republican attacks, because it is a major reason why most Americans have health

insurance coverage through either their own employer or that of a family member.xl

At the same time though, Congress has ignored the ticking time bomb of taxes on the middle the Alternative Minimum Tax (AMT)and we have to fix the problem now. The AMT is aparallel tax system that was originally designed in the late 1960s to prevent the ultra-rich fromavoiding their tax responsibilities. But because the income levels that trigger the AMT werenever indexed for inflation, it has threatened to ensnare millions of middle-class Americans with


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much higher tax rates. Every year, the congress has patched the AMT by temporarilyincreasing the exemption level that shields taxpayers from the tax. Without such a patch, 31million Americansagain, most of them middle-classwould have paid an average of $4200

in higher taxes in 2012.xli Fixing it permanently is estimated to cost $1.1 trillion over the next

decade, and the one-year cost in 2012 is $85 billion.xlii


Through tricks and loopholes, many corporations pay no federal income taxes. In 2005,25 percent of large corporations paid no income taxes while making $1.1 trillion inrevenue.

Closing all of these loopholes would save hundreds of billions of dollars every year: $100billion annually in offshore tax havens, $35 billion over 10 years for oil and gas, $5billion a year for agribusiness ethanol giveaways, $5 billion a year for corporate skyboxesand restaurant write-offs, and breaks for companies that ship jobs overseas, just to name afew.

Big executives at hedge funds are required to pay just 15 percent rather than the income

tax rates the rest of us paystopping it would save $10 billion a year. Ending the Bush tax cuts for the wealthy would save $830 billion over the next 10 years.

We should preserve tax cuts for the middle class.

Fixing the AMT will shield 31 middle class million taxpayersand even more in futureyearsfrom $4200 per year in higher taxes. It will cost $1.1 trillion over the nextdecade.

All told, even with the cost of fixing the AMT included, these reforms wouldconservatively save hundreds of billions of dollars over the next ten years.

Taken together, these reforms would put our priorities back where they should be: helping themiddle class to get fair treatment on their taxes, and ending the giveaways and benefits for the

wealthiest corporations and individuals. These changes will save tens to hundreds of billions ofdollars every year.

xix

http://www.usatoday.com/news/nation/story/2011-09-13/census-household-

income/50383882/1xx

http://www.americanprogress.org/issues/2011/09/big_oil_cash.htmlxxi

http://www.huffingtonpost.com/2011/05/25/bank-profit-corporate-bonus_n_866903.htmlxxii

http://www.huffingtonpost.com/2011/05/25/bank-profit-corporate-bonus_n_866903.htmlxxiii

http://thinkprogress.org/economy/2010/02/11/173127/narrow-tax-burden/xxiv

http://www.theatlanticwire.com/politics/2011/04/tax-rates-down-dramatically-super-

wealthy/36755/xxv

http://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlxxvi

http://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-

profit_b_841173.htmlxxvii

http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdfxxviii

http://www.ctj.org/corporatetaxdodgers/CorporateTaxDodgersReport.pdf
http://dealbook.nytimes.com/2008/08/13/study-tallies-corporations-not-paying-income-tax/http://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://dealbook.nytimes.com/2008/08/13/study-tallies-corporations-not-paying-income-tax/


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xxixhttp://hsgac.senate.gov/public/_files/REPORTTaxHavenBanksJuly1708FINALwPatEliseChgs92

6080.pdfxxx

http://www.huffingtonpost.com/thenewswire/archive/taxes.htmlxxxi

http://www.americanprogress.org/issues/2010/04/oil_subsidies.htmlxxxii

http://www.americanprogress.org/issues/2011/02/tax_breaks_infographic.htmlxxxiii

http://www.usatoday.com/news/opinion/editorials/2011-05-30-10-terrible-tax-

breaks_n.htmxxxiv

http://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-

profit_b_841173.htmlxxxv

http://www.americanprogress.org/issues/2011/05/pdf/budget_for_growth.pdf,

http://www.blueoregon.com/2011/07/merkley-calls-end-bluegrass-boondoggle/,

http://www.dailyyonder.com/congress-extends-special-nascar-tax-break/2010/01/01/2521xxxvi

http://www.nytimes.com/2010/05/29/business/29carried.html?pagewanted=printxxxvii

http://www.nytimes.com/2010/05/29/business/29carried.html?pagewanted=printxxxviii

http://articles.nydailynews.com/2011-10-13/news/30291602_1_ordinary-income-tax-

unfairness-tax-ratexxxix

http://www.cbpp.org/cms/?fa=view&id=3220xl

http://www.taxpolicycenter.org/briefing-book/key-elements/health-insurance/exclusion.cfmxli

http://www.taxpolicycenter.org/upload/Elements/II4KEYELEMENTS_AlternativeMinimumTax.

final.pdfxlii

http://www.americanprogress.org/issues/2010/07/let_cuts_expire.html
http://www.americanprogress.org/issues/2011/02/tax_breaks_infographic.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.americanprogress.org/issues/2011/05/pdf/budget_for_growth.pdfhttp://www.americanprogress.org/issues/2011/05/pdf/budget_for_growth.pdfhttp://www.blueoregon.com/2011/07/merkley-calls-end-bluegrass-boondoggle/http://www.dailyyonder.com/congress-extends-special-nascar-tax-break/2010/01/01/2521http://www.dailyyonder.com/congress-extends-special-nascar-tax-break/2010/01/01/2521http://www.blueoregon.com/2011/07/merkley-calls-end-bluegrass-boondoggle/http://www.americanprogress.org/issues/2011/05/pdf/budget_for_growth.pdfhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.huffingtonpost.com/rep-bernie-sanders/end-tax-breaks-for-profit_b_841173.htmlhttp://www.americanprogress.org/issues/2011/02/tax_breaks_infographic.html


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Real Reform in Washingtonthe Kind They Wont Like

Americans understand that Washington isnt working. Approval of Congress has cratered to an

all-time-low of 12 percent.xliii

Unlike the past, when the American people often disliked theinstitution of Congress but liked their own representative, for the first time a majority of

Americans now feel that their own member of Congress should not be re-elected.xliv

And why?Because almost 90 percent of Americans today think that lobbyists, PACs, and the big

corporations they represent have too much influence and are running things behind the scenes.xlvAnd theyre right. The startling numbers on lobbying, the influence of corporations in elections,

and the misuse of taxpayer funds by Members of Congress has left Americans justifiably angry,mistrustful, and feeling cut out from their government.

There is absolutely no chance of ending this corporate lobbyist control of government and thecorruption by incumbent elected officials without deep reforms, the kind that entrenched powersin Washington will hate, but that can actually win back some trust from the American people.There should be a permanent ban on earmarks; no more contributions, bundling, or gifts from

lobbyists; public disclosure of all meetings with lobbyists; a five year ban on Members ofCongress and senior staff from becoming lobbyists; a constitutional amendment to preventcampaign donations from corporations; independent commissions to draw Congressionaldistricts; and a ban on campaign-style mail financed by taxpayers.

Lobbying ReformIn 2010, $3.51 billion was spent on lobbying and there were 12,951 registered federal lobbyists,

almost 25 lobbyists per member of Congress.xlvi

A majority of them are former federalgovernment staffers or elected membersin fact, there are 370 former Members of Congress

who are active registered federal lobbyists today.xlvii The revolving door swings the other way aswell, with 130 staffers who were former federal lobbyists working in Congress right now at the

most senior levels.xlviii

Campaign contributions from lobbyists and their immediate familymembers to the top 100 recipients among Members of Congress topped $36 million in the last

election cycle alone.xlix

Many of these lobbyists over the years have sought earmarks, which reached a total of 9,129projects at a cost of $16.5 billion in 2010 before a temporary moratoriuma figure that actually

represented a reduction from the glut of such projects a few years previous.l And while explicitbribery is still against the law, it has not only been legal but common for lawmakers to acceptcampaign contributions from lobbyists with one hand and dole out earmarks with the other, anarrangement with which the American people have already expressed their profound disgust.

Efforts at earmark reform in recent years have been marked by half-measures, includingdisclosure, reducing the amount spent on earmarks, and temporary suspension. But manyMembers of Congress have brazenly resisted even these rudimentary steps, and an effort in thelast Congress to ban Members of Congress from taking contributions from anyone for whom

they had sought an earmark went nowhere, showing where Congress really stood on this issue.liThe only way to fix the problem for good is to ban earmarks permanently, and remove thissource of corruption.


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It is important to note that efforts to eliminate earmarks have raised concerns in Connecticutabout submarine manufacturing and other defense industries, which have benefited at times fromearmarked funding. However, the majority of funding for defense industry work is contained inthe defense authorization bill and does not rely on earmarks, and this year during an earmark

moratorium Connecticuts defense suppliers did extremely well.

lii

In fact, Senator Blumenthalcalled the measure a historic blueprint for the future of our national defense and overwhelmingvote of confidence in the weapons systems made here in Connecticut. liii The bill contained $3.2billion for two submarines in 2012, with another $1.5 billion for advance procurement ofadditional submarines in 2013 and 2014, plus $1.07 billion to develop a replacement for theOhio-class submarine designed to carry nuclear missiles, not to mention 114 new Sikorsky

Blackhawk helicopters and investment in a new helicopter design.liv

In short, removing earmarksshould have no significant negative impact on Connecticuts highly competitive defense

industries.

Efforts to slow the revolving door between lobbying and government and to remove theunsavory tools that lobbyists can use to influence public officials have similarly been marked byhalf-measures. Bans on meals from lobbyists led to bizarre contortions of the rules, like the ideathat hors doeuvres and finger foods were ok, but a sit down burger was not. One and two year

post-employment lobbying bans for Representatives and Senators respectively led to formermembers going to corporate groups and lobbying firms and staying on retainer while serving outtheir banlike sitting in a cushy corporate penalty box for a yeara relatively low price thatthe firm is all too happy to pay to get a member of congress lobbying for them in short order.Requirements to disclose bundling have done nothing to slow the flow of money from lobbyistsand their clients to candidates. Even the most notorious convicted lobbyist in historyJack

Abramoffbelieves the restrictions have loopholes that he could drive a truck through.lv

This is why we must permanently end all contributions, bundling and gifts from lobbyists byforce of law, as I have worked to do in Connecticut. Members of Congress should be required topublicly disclose all meetings they have held with lobbyists. And the current cooling offperiods should be extended into five-year bans on Members of Congress and senior staff frombecoming lobbyists, which is the only way to remove the financial incentive for corporations towarehouse future lobbyists until their bans have run out. And the ban should extend both ways,because the door swings both ways: lobbyists should be banned for 5 years from becomingsenior congressional staff, so that they are not taking the agendas of their paying corporateclients inside the halls of Congress. Again, restrictions that I have supported in Connecticutprovide a good model for some of these same reforms that must happen in Washington.

In addition, we should enact laws to ban Members of Congress from trading on insiderinformation that regular people do not have access toa practice that has recently beenrevealed to be common and tolerated within the walls of Congress.

Congress should follow our example in Connecticut. As a state representative, I won passage ofan ethics reform law considered to be one of the toughest in the country that banned gifts fromlobbyists to legislators and became a model for other state legislatures.


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Overturn Citizens UnitedThere has been an explosion of corporate money flooding into our elections.

The disastrous 2010 Supreme Court decision in Citizens United v. Federal Election Commissionallowed corporations or unions to fund unlimited outside expenditures in political campaigns.

Immediately, the ruling led to well over $100 million in corporate spending to influenceelections in 2010, though because these funds are undisclosed it is hard to know for sure how

much more it might have been.lvi

In fact, the percentage of money spent by groups that do notdisclose their donors has skyrocketed from 1 percent to 47 percent since the 2006 midtermelections. Even worse 72 percent of political advertising spending by outside groups in 2010

came from sources that were prohibited from spending money in 2006.lvii

Worse still, a federal judge recently ruled that all restrictions on corporate giving should beabolished and that companies should be allowed to give directly to candidates, a change thatfurther blows the doors off the boundaries for corporate influence on elections. As is clear fromthe role of lobbyists described above, the problem in America is that corporations already have

too large a voice in our government. Indeed, Political Action Committees (PACs)most ofthem funded by major corporationsalready act as yet another major arm of corporate

influence and gave almost $425 million to federal candidates in the last election cycle.lviii

The only sane recourse is to enact a constitutional amendment to undo the damage caused byCitizens United. Such an amendment can make clear that since the sovereign right of the peopleto govern and hold free elections is essential to a free democracy, the Constitution will not beconstrued to limit the authority of Congress or the states to regulate, with regard to its impact onany campaign or election, the spending and activities of any corporation.

I was able to pass a groundbreaking campaign finance reform law in Connecticut that overhauls

Connecticuts electoral process, places spending limits on all state-level races, brings equity tothe process through a new system of public financing, and allows for greater participation in theelectoral process. The country needs this kind of serious campaign reform.

Independent Commissions to Draw Congressional DistrictsAs the nationally recognized legal scholar Justin Leavitt wrote last year about redistricting:the process is marked by secrecy, self-dealing and backroom logrolling among electedofficials. The public is largely shut out of the process. As outlined in Leavitts comprehensivereport, the kaleidoscope of different state systems for redistricting have created myriadopportunities for politicians to choose who their voters will be (California), eliminate strongincumbents of the other party (Virginia), eliminate challengers for incumbents that one party

wants to protect (Illinois), pack voters of one party into one district to limit their opportunity toelect representatives (Texas), dilute minority voices so that they cannot form a meaningful votingbloc (Texas, again), and to turn the parties against each other in a game of who can hurt the otherparty more (Illinois, again, though pretty much everywhere with a partisan, non-independent

process).lix

These kinds of actions have been repeated again and again across the countryand go to theheart of why the American people do not trust either party, their elected representatives, or their


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own elected government. This is a tragedy for the worlds greatest Democracy. Worse still, theoverall effect of incumbent politicians controlling district lines is that most Members ofCongress can ensure that they are in safe seats that will not be contested, which means that they

are no longer accountable to the voters who elect them.lx This leads to politicians acting withimpunity, cozying up to moneyed special interests and doing their bidding, rather than acting in

the peoples best interest.

Only six states use independent commission to re-draw district lines, but the American BarAssociation and many legal scholars have advocated this approach nationwide as the onlyeffective way to end the partisan shenanigans. Americans should have the same vote no matterwhere they live. Several proposals have been put forward in Congress to require states adoptindependent commissions to handle redistricting, and the time is long overdue for this vitalchange for our democracy.

Ending Taxpayer-Financed Campaign-Style MailIncumbent Members of Congress have built advantages into the system to ensure their re-

election. They run in districts that are often designed for their advantage. They get to raisemoney from highly paid lobbyists for whom they can get earmarks and do other legislativefavors, and they get to deliver for corporations who can pour mountains of cash into supportingtheir campaigns.

On top of it all, Members of Congress have increasingly been using the tax dollars that we givethem to run their offices to support their political campaigns through a practice called frankedmail. The congressional franking privilege dates back to 1775 and allows Members of Congressto transmit mail under their signature without postage, and Congress then reimburses the U.S.

Postal Service using tax dollars.lxi

For many years, and still for much congressional mail to this day, this privilege was used forbeneficial public purposes as it was intended, such as responding to constituents questions andconducting official business. But in recent years, Members of Congress have increasingly usedthis loophole to send slick, glossy fliers touting their achievements that are indistinguishablefrom campaign mail. Individual House offices will often spend well over $100,000 in this self-promotion to get re-elected, and all at taxpayer expense. Spending by some has come close tohalf a million dollars. And offices have begun to purchase highly developed commercial lists to

better target their mail to voters, as they would in any campaign.lxii

This simply has to stopand the fix is simple. A basic rule change in Congress would end theability to send this kind of campaign-style mail.


In 2010, $3.51 billion was spent on lobbying and there were 12,951 registered federallobbyists, almost 25 lobbyists per member of Congress, 370 of whom are formerMembers of Congress.


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There were 9,129 earmarks in 2010 costing taxpayers $16.5 billion. Members ofCongress commonly accept campaign contributions from the same people who are askingfor earmarks.

Reform efforts have been ignored, or have become a joke. Many Members of Congressresisted earmark disclosure. Bans on taking meals from lobbyists have been

circumvented by standing up and eating, or having the lobbyist throw a fundraiser.Revolving door rules have done nothing to stop the flow back and forth between theCapitol and K Street.

There was at least $100 million in direct corporate spending to influence elections in2010, probably a lot more, and $425 million in PAC contributions.

The process of creating congressional districts has turned into a political game betweenthe parties that protects their incumbents and has nothing to do with the public interest.

Members of Congress routinely spend upwards of $100,000 and up to half a milliondollars on taxpayer-financed, glossy political mail that is virtually indistinguishable fromcampaign materials, giving them another overwhelming advantage in elections.

On all of these issues, Washington has shown itself incapable of real reform. The steps it hastaken have been weak half-measures. Real reform is the kind of reform that makes lobbyists,corporations, and incumbent Members of Congress squirm, and gives real people faith again and that is what we need now. That is why we need a permanent ban on earmarks; no morecontributions, bundling, or gifts from lobbyists; public disclosure of all meetings with lobbyists;a five year ban on Members of Congress and staff from becoming lobbyists, a constitutionalamendment to prevent campaign donations from corporations; independent commissions to drawCongressional districts; and a ban on campaign-style mail financed by taxpayers

xliii

http://www.newsmax.com/InsideCover/PollApprovalRatingforCongressMatchesRecordLow/2

011/09/17/id/411342

xliv http://politicalticker.blogs.cnn.com/2011/08/09/cnn-poll-time-to-clean-house-in-congress/xlv

http://www.harrisinteractive.com/NewsRoom/HarrisPolls/tabid/447/mid/1508/articleId/790

/ctl/ReadCustom%20Default/Default.aspxxlvi

http://www.opensecrets.org/lobby/index.phpxlvii

http://www.opensecrets.org/revolving/top.php?display=Zxlviii http://www.opensecrets.org/revolving/reverse.phpxlix

http://www.opensecrets.org/lobby/lobby_contribs.phplhttp://www.cagw.org/reports/pig-book/2010/

lihttp://thomas.loc.gov/cgibin/bdquery/D?d111:2:./temp/~bd38Sj:@@@D&summ2=m&|/hom

e/LegislativeData.php?n=BSS;c=111|lii

http://www.ctnewsjunkie.com/ctnj.php/archives/entry/ct_manufacturers_make_out_in_senate_defense_spending_bill/liii

http://www.ctnewsjunkie.com/ctnj.php/archives/entry/ct_manufacturers_make_out_in_sen

ate_defense_spending_bill/liv

http://www.ctnewsjunkie.com/ctnj.php/archives/entry/ct_manufacturers_make_out_in_sen

ate_defense_spending_bill/lv

http://www.politico.com/news/stories/1111/67460.html


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lvihttp://www.opensecrets.org/news/2011/05/citizens-united-decision-profoundly-affects-

political-landscape.htmllvii

http://www.opensecrets.org/news/2011/05/citizens-united-decision-profoundly-affects-

political-landscape.htmllviii

http://www.opensecrets.org/pacs/list.phplix

http://brennan.3cdn.net/7182a7e7624ed5265d_6im622teh.pdflx

The most recent Cook political report lists only 55 US House of Representatives seats in

competitive categories, about 1 in 8 or 13% fo the chamber.

http://cookpolitical.com/charts/house/competitive_2011-11-17_12-27-56.php.lxi

http://www.fas.org/sgp/crs/misc/RS22771.pdflxii

http://www.usnews.com/news/articles/2011/04/08/more-taxpayer-money-spent-on-mail-

during-election-years


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Supporting Clean American Energy

The ChallengeOur reliance on foreign oil and other fossil fuels is hurting our security, our economy, and ourhealth.

The United States imports 9.4 million barrels of oil every single day, meaning we spend well

over a billion dollars on foreign oil every single day.lxiiilxiv

Oil imports alone created a $386billion U.S. trade deficit in 2008, compared to a $266 billion deficit with China and a $690billion overall deficit that year. What is worse perhaps is that in 2008, the U.S. imported about 4million barrels of oil a dayabout 40 percent of our total importsfrom countries labeleddangerous or unstable by the State Department. As former CIA director Jim Woolsey and

numerous other military and security leaders have said, we are literally funding enemies who are

trying to kill our soldiers abroad and our civilians at home.lxv

At the same time, fossil fuel use produces high levels of pollution that cause significant health

and environmental problems in our country, and of course is causing climate change. Coal is thesource of about half of our electricity, and is single biggest source of air pollution, in addition tocausing significant problems for water and land resources.lxvi And the cost of coal will onlyincrease over time as the quality of the coal decreasesin fact, it now has 20 percent less

energy per kilogram than it did in 1949.lxvii All of this will raise costs on middle class Americansmore and more in the next 20 years.

By becoming energy independent, we could stop taking the hard-earned money of Americancitizens, stop funneling it to our enemies, and stop destroying our own natural resources. Wecould stop being at the mercy of foreign despots. We could improve our health and avoid thedevastating costs of environmental damage. We could eliminate most of our trade deficit.

And, we could create an explosion of jobs and growth in America.

A recent analysis by Google found that through developing innovations in clean, American

energy, we could:lxviii

Grow US GDP by over $155 billion per year

Create over 1.1 million new net jobs per year

Reduce household energy costs by over $942 per year

Reduce US oil consumption by over 1.1 billion barrels per year

Reduce US total carbon emissions by 13 percent.

Looking at the difference between what our current situation is costing us and the benefits wecould reap by developing clean American energy, it becomes obvious that there is perhaps nomore vital step that we could take to help the middle class well into the future than to invest inour own clean energy sector.

Unfortunately, other countries are currently getting the jump on us. A report last year by the

Pew Charitable trusts found that:lxix


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Those nationssuch as China, Brazil, the United Kingdom, Germany and Spainwithstrong, national policies aimed at reducing global warming pollution and incentivizingthe use of renewable energy are establishing stronger competitive positions in the cleanenergy economyChina, for example, has set ambitious targets for wind, biomass and

solar energy and, for the first time, took the top spot within the G-20 and globally foroverall clean energy finance and investment in 2009. The United States slipped to secondplace. Relative to the size of its economy, the United States clean energy finance and

investments lag behind many of its G-20 partners. For example, in relative terms, Spaininvested five times more than the United States last year, and China, Brazil and theUnited Kingdom invested three times morepolicy, investment and business expertsalike have noted that the clean energy economy is emerging as one of the great globaleconomic and environmental opportunities of the 21

stcentury[the U.S. is at] risk of

falling further behind its G-20 competitors in the coming years unless it adopts a strongnational policy framework to spur more robust clean energy investment.

The SolutionSo how do we reclaim that top spot, free ourselves from foreign oil, transition away from dirtiermainstays like coal, and create millions of jobs here? There are many pieces to the puzzle. Foryears, policymakers have talked about pricing carbon emissions and advancing renewableportfolio standards, but both ideas are stalled in Washington. Advanced biofuels will have to bepart of the solution. Pushing our fuel economy standards for vehicles more aggressively, on topof the progress that the Obama administration has made, will be important, as will overall energyefficiency. And the US government should support domestic alternative fuel sources by makingsure that its vehicles and postal service vehicles use no foreign oil.

But one approach that has not received as much attention, but is beginning to be adopted at thestate and local level, happens to be the most successful policy in the world for creating rapidgrowth in clean energy technology. It is known by a variety of namesadvanced renewablecontracts, feed-in rates, feed-in tariffs, CLEAN contracts, standard contracts for renewables

we would simply call it Clean Energy Contracts.lxx

By whatever name, this policy has been responsible for a huge growth of wind and solar energycapacity in over 40 countries and in 80 jurisdictions around the world, including most of

Europe.lxxi It is responsible for nearly all of the growth in European solar since 1997,lxxii for 64percent of the world's wind power, and almost 90 percent of the world's solar power.

lxxiii

In fact, a similar policy existed in the US in the early 1980s, and now exists in California,

Vermont, Hawaii, and other US locales. The German program has been so successful thatGermany now has twice the solar capacity of the U.S., with only around a quarter of our

population and half the sunlight of the Southwest United States.lxxiv

When China set up such apolicy for wind projects in 2009, it quickly overtook the United States to become the world's

number one wind power market.lxxv

Clean Energy Contracts are a simple concept: it simply means mandating that utilities mustpurchase renewable energy under long-term contracts at set purchase prices (based on the cost of


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generation, so they can be different for different technologies), and with guaranteed grid accessfor producers. Eligible renewable electricity generators (which can include homeowners,business owners, or larger scale private investors) are paid a set price for the renewableelectricity they produce. The rates are calculated by technical experts to allow producers to covertheir costs plus a small profit, and these rates usually decrease over time to encourage innovation

and efficiency.

This policy is so effective because the contracts make the investment attractive and therebycreate a reliable market where investors can expect a clear return over an extended period oftime. From there, the market takes over, and entrepreneurs and investors flood in. No otherpolicy mechanism creates this kind of incentive for investment, which is why no other policyhas had this kind of massive success around the world in unleashing capital and generatingexplosive growth in clean energy technology.

Given this track record of success, why has not this policy been adopted more widely here inAmerica yet? The major reason is that these programs are designed to pay producers the

higher prices for the electricity generated by clean sources, which means that programsabroad have often been designed so that consumers pay these higher costs through theirelectric bills. Many lawmakers have been reluctant to put in place a policy that might raiserates even a little, especially at a time when so many Americans are struggling to pay theirbills (note: it is actually unclear if consumers actually pay higher rates over time, as

explained in this footnote,lxxvi

but policymakers have been hesitant anyway).

I agree that we should not raise electric bills on the middle class and small businesses. At thesame time, we desperately need this kind of a policy to turn the tables on clean energy,overtake the rest of the world, and create millions of jobs here in America. That is why weshould design a national clean energy contract policy that does not put any of the burden on

ratepayers.

In fact, designing a specific program is a highly technical area that many experts have goneto great lengths develop (our own National Renewable Energy Laboratory has done extensivework on this) and which can be left to experts at the most detailed level. However, we caneasily outline the principals for an effective clean energy contract program for America:

Instead of asking ratepayers to pay for any higher initial costs of electricity fromclean American sources, the contracts should be financed with a portion of therevenue from the transaction tax on Wall Street. Using such a dedicated fund ratherthan relying on electric rates been used successfully in several instances around the

world,

lxxvii

and it would help to ensure that investors will know that there is a reliablesource of support for clean energy development.

To limit the total cost of the program, we should cap the amount of new contractsavailable to be filled to $50 billion per year for five years ($30 billion in the first year,the amount projected to be left over after paying for the mortgage program).Vermonts program is capped at 50 MW of power generated it is also possible to

cap a national program based on total funds available.lxxviiilxxix

Under this approach,producers would agree to contracts directly with utilities, and the utilities would be


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compensated for the extra costs of the electricity so that there would be no added costto ratepayers. This would ensure that we are leveraging funds to create a massiveinfusion of capital into clean American energy.

As has been recommended by the National Renewable Energy Laboratory based onsuccessful programs around the world, the price paid for electricity in the Clean

Energy Contracts should allow producers to recover their costs and make a reasonableprofit, but should diminish each year until it equals the prevailing market rate.lxxxThis will drive innovation, technological advances, and greater production efficiency.It will also mean that the amount required to be financed by the transaction tax onWall Street will decrease every year to zero. Even if we assume a cap of $50 billionper year for the first 5 years, $40 billion for the next five, $30 billion for the next five,and $20 billion for the last five, over the first ten years the cost would be $450 billionabout half of what we would pay to keep the Bush tax cuts for the wealthiestAmericansand over 20 years the total cost would be $700 billion. And we wouldstill be saving $500 billion overall over ten years from closing the offshore tax havenloophole.

For the system to work best, producers must be guaranteed access to the grid.Deficiencies in the grid or ability to connect with it have slowed renewable energy

deployment in otherwise successful programs in other countries.lxxxi Utilities shouldbe required to perform whatever upgrades are necessary to allow all producers tosupply their electricity to the grid at all times, and should not be allowed to pass thecosts of these upgrades on to ratepayers. To help support this work and ensure thatratepayers do not face increased costs, we should create a national infrastructure bank(see previous proposal) with an explicit mandate to work with utilities to finance gridupgrades.

The program should cover multiple sources of clean energy, including wind, solar,geothermal, and others.

The program should guarantee U.S. manufacturing growth by requiring that cleanenergy products used to generate the energy be manufactured here in the U.S.

The result of a program designed this way would be to drive an explosion of privateinvestment in clean American energy, which in turn would create millions of jobs andhundreds of billions of dollars of additional economic growth. This alone would not liberateus from foreign oil, which would require the development of electric vehicles and otherproducts, but it would spur massive growth in American clean energy and bring all of theeconomic, environmental, and employment benefits that come with it.


The United States imports 9.4 million barrels of oil every single day, meaning wespend well over a billion dollars on foreign oil each day. This accounts for well overhalf of our trade deficit, and 40 percent comes from dangerous and unstable countries.Coal-fired electricity is the biggest source of air pollution in our country.

Prices of fossil fuels are projected to rise over time, meaning Americans will bepaying more and more for energy that supports our enemies, and for electricity thatharms our health and causes massive environmental costs.


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By contrast, by developing innovations in clean, American energy, we could grow USGDP by over $155 billion per year, create over 1.1 million new net jobs per year, andreduce household energy costs by over $942 per year.

The most successful policy around the world for developing domestic clean energy iswhat we call Clean Energy Contracts. They allow clean energy producers to sell their

energy to the utility for a set price in a long-term contract, and therefore create a floodof private investment in clean energy.

Unlike in some places, though, we should not allow middle class ratepayers to fundany increased costs. We should take a portion of the funds from the transaction taxon Wall Street and devote them to Clean Energy Contracts to spur investment in cleanAmerican energy. Ratepayers wont pay an extra dime.

Utilities should be responsible for any upgrades to the grid necessary to make sure therenewable energy producers can connect and supply energy. They should not beallowed to pass those costs on to ratepayers. A national infrastructure bank should becreated with a primary goal of supporting this upgrading process.

We should allow $50 billion per year on this program for the first five years, and less

in subsequent years. Over time, the contract prices should diminish until they equalthe overall market rate, spurring innovation and technological growth in this sector.

This will create millions of jobs and hundreds of billions of dollars of economicgrowth.

lxiii

http://www.eesi.org/fossil_fuelslxiv

http://www.trumanproject.org/files/papers/Oil_Addiction_-

_Fueling_Our_Enemies_FINAL.pdflxv

http://www.trumanproject.org/files/papers/Oil_Addiction_-

_Fueling_Our_Enemies_FINAL.pdflxvi

http://www.ucsusa.org/clean_energy/coalvswind/c01.htmllxvii http://www.smartplanet.com/blog/energy-futurist/why-america-needs-a-feed-in-tariff/174lxviii

http://cleaneconomynetwork.org/sites/default/files/Google.org-

The_Impact_of_Clean_Energy_Innovation_0.pdflxix

http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Global_warming/G-

20%20Report.pdf, Executive Summarylxx

http://www.smartplanet.com/blog/energy-futurist/why-america-needs-a-feed-in-tariff/174lxxi

http://www.wind-works.org/FeedLaws/SnapshotofFeed-

inTariffsaroundtheWorldin2011.htmllxxii

http://www.smartplanet.com/blog/energy-futurist/why-america-needs-a-feed-in-tariff/174lxxiii

http://www.grist.org/renewable-energy/2011-11-26-simple-transparent-feed-in-tariff-

policy-responsible-for-mostlxxivhttp://www.smartplanet.com/blog/energy-futurist/why-america-needs-a-feed-in-tariff/174

lxxvhttp://www.nytimes.com/cwire/2011/09/14/14climatewire-china-uses-feed-in-tariff-to-

build-domestic-25559.html?pagewanted=alllxxvi

If the costs of the program were passed on to consumers, there are many reasons why they

are likely to be modest or make rates no higher than they would have been. One is that rates

based on fossil fuel sources can fluctuate wildly, so renewable sources are not always


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significantly more expensive. Another is that the because the cost is spread, it has amounted to

less than $50 per household in Germany which has the highest concentration of renewable

energy sources in the world, and even then the reduced cost from replacing fossil fuel sources

means that the final cost to households is probably zero. Additionally, nearly three-quarters of

our coal-fired capacity, contributing 46 percent of our electricity, is at least 30 years old; so notonly are coal prices going up naturally over time, but all of that capacity must be replaced, so

prices will rise to account for building that physical plant, and the difference between costs

from renewable sources and costs including building new plant will be fairly even, or actually

better from sources like solar. And finally, programs are often designed to reduce the amount

paid in the contract for renewable sources, so the costs of the program decrease as well to

overall market rates. See http://www.smartplanet.com/blog/energy-futurist/why-america-

needs-a-feed-in-tariff/174.lxxvii

http://www.nrel.gov/docs/fy10osti/44849.pdf, pp.94-95.lxxviii

http://www.pewclimate.org/node/6558lxxix

http://www.nrel.gov/docs/fy10osti/44849.pdf, p.83.lxxx

http://www.nrel.gov/docs/fy10osti/44849.pdf, summary.lxxxi

http://www.nytimes.com/cwire/2011/09/14/14climatewire-china-uses-feed-in-tariff-to-

build-domestic-25559.html?pagewanted=all


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National Defense: Smarter and Stronger

It is time to refine our global military strategy. Over the last quarter century, the need to protectour people and our allies, to deter aggression, and to safeguard our interests has remainedconstant. But we now face a vastly different spectrum of threats than ten or even ten years ago.

Instead of a security landscape defined by a bipolar world power structure, diffuse global terrornetworks now represent a primary threat to US citizens and allies. We live in a time of politicaland economic instability, where internet-fueled popular movements can suddenly overturnlongstanding powers and where deterring aggression from nuclear armed and outcast regimescommands tremendous amounts of our diplomatic and military focus.

As our defense needs evolve, so to must our defense posture. We cannot win new wars byfighting old ones. We need to continue our aggressive fight against terrorism and ensure ourcontinuing ability to project power, but we also face changing needs and real budget constraints.Our goal should be to align our military strength to the threats and realities we now face, andmove past our obsolete Cold War defense posture.

In short, our challenge is to make our defense smarter and stronger. One of the best ways to dothat would be to immediately re-align our forces by bringing all of our troops home from Iraqand Afghanistan, and closing many of the bases and returning troops from Europe and Japan.

Bases and Force DeploymentOur current worldwide deployment of forces, especially our presence in Europe, no longermakes sense. As the Congressional Budget Office reported:

Administration officials have questioned whether U.S. forces that are stationed primarily inGermany and South Korea are positioned appropriately to respond to probable future

conflicts. They argue that conflicts are much more likely to occur in Africa, Western Asia, orthe Middle East than anywhere in Western Europe. Similarly, conflicts may occur in Asia atlocations other than on the Korean Peninsula Although the two Army divisions stationed

in Germany were well placed to defend NATO from Soviet attack, they cannot deployquickly to conflicts outside Germany. For example, three months elapsed between thedecision to move the 1st Armored Division from Germany to Iraq in March 2003 and itsarrival in that theater.lxxxii

The overall strain of our worldwide deployments is substantial. More than one-third of U.S.troops are currently based abroad or afloat in international waters, and hundreds of bases andaccess agreements exist throughout the world.lxxxiii There are more than 1,000 military bases

overseas alone.

lxxxiv

As one report summarized:

More than half a century after World War II and the Korean War, we still have 268 basesin Germany, 124 in Japan, and 87 in South Korea. Others are scattered around the globein places like Aruba and Australia, Bulgaria and Bahrain, Colombia and Greece, Djibouti,Egypt, Kuwait, Qatar, Romania, Singapore, and of course, Guantnamo Bay, Cubajust to name a few.

lxxxv


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It is hard to know the exact cost of this sprawling global presence, because the Department ofDefense's budgets do not show the breakdown of costs, for example, between maintaining basesat home and overseas.lxxxvi Nevertheless, one reliable estimate puts the total cost of maintainingtroops, equipment, fleets, and bases overseas, including our presence in Iraq and Afghanistan, at$250 billion annually.lxxxvii

Each base and unit sent overseas is not just an investment in the troops themselves, but alsocreates mushrooming strains and costs on our military. Most bases come with all of the amenitiesof domestic facilities, such as commissaries, chapels, exercise facilities, and post offices. InGermany alone, our military runs 70 schools for more than 30,000 children who are dependentsof our personnel,lxxxviii plus 36 "villages" for family housing, which have a replacement value ofroughly $14 billion, plus five hotels, 15 smaller training areas, nine airfields, four depots, threegolf courses, a Boy Scout camp, and a Girl Scout camp.lxxxix We also pay for moving expensesfor all household goods, including cars, for all of the personnel at these forward-base units,which means in Germany that every year we are acting as overseas house movers for around30,000 personnel and their families as they cycle through.xc This is why the Congressional

Budget Office (CBO) estimates that it costs about $1 billion more per year to maintain about56,000 Army forces in Germany alone than if those troops were stationed in the United States.xci

Pentagon leaders have recognized that it is time to change our defense posture in Europe. In2004, then-Secretary of Defense Donald Rumsfeld publicly planned to close 33 percent of ouroverseas bases and relocate 70,000 troops and 100,000 family members and civilians back

home.xcii National Security Adviser Jim Jones, who was then the commander of all U.S. forces inEurope, called for closing 20 percent of our bases in Europe. More recently, Secretary ofDefense Leon Panetta has publicly contemplated changing the number of American troops based

in Europe to better fit todays security needs.xciii

Moreover, under current plans, the Army is already set to decrease from 570,000 to 520,000troops, and the Marine Corps from 202,000 to 186,600, beginning in 2015. Many analysts feelthat our best strategy would be to go further and return to the end strength we had in 2001 beforethe surge of forces driven by the wars in Afghanistan and Iraq, and which would be better

matched to the global needs we are likely to face in the near future.xciv So many of the troops thatwould return from overseas could be re-assigned to bases in the US over time without the need toconstruct new facilities.

In addition, many analysts have pointed to increasing our naval strength as a vital way to projectour power and protect our interests in the new security climate.xcv Especially as we address aresurgent Russia and an aggressive China that are both looking to assert their global interests,

increasing the capacity of our Navy would be an effective means to project power and protectour interests and allies.xcvi This would be a far better way to maintain a flexible yet powerfuloverseas presence than to maintain the sheer volume of static troops and bases overseas that wenow have. This applies to our military presence in Japan as well, where we have over 35,000military personnel, but only about half are Navy or Air Force, and where we could reduce theoverall number of bases and troops but still maintain a strong naval and air presence to protectinterests in the region.

xcvii


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It should be noted that the 28,000 troops stationed in South Korea still provide an importantdeterrence against North Korean aggression, and we must maintain that strong posture.However, they are housed in obsolete, poorly-maintained facilities that are so bad, and in whichconditions are so dangerous, that personnel are entitled to receive hardship duty pay of $150 permonth. That in turn means that families do not accompany their enlisted member, which means

constant turnover in one-year tours that places stress on the Army. The entire system could befar better rationalized with modernized and improved basing.xcviii

AfghanistanThe biggest ongoing drain on our military is the wars in Iraq and Afghanistan. We have spent$1.2 trillion so farone of the biggest sources of the massive debt we have accumulated as anation in the past decadeand were still spending around $10 billion per month through thispast year. While the President has ordered the final withdrawal of forces from Iraq this year, thepace of withdrawal from Afghanistan is planned to be far slower, taking until the summer of

2012 to go from 100,000 to 68,000, and until 2014 to reach minimal forces.xcix

We have achieved our principal military objectives in Afghanistan. The combination of targetedrobotic drone aircraft and commando team attacks has significantly degraded al Qaedascapabilities and diminished its numbersin fact, it is estimated that there are now likely fewerthan 500 al Qaeda militants left in Afghanistan and Pakistan. While it is important that wemaintain our drone capabilities so that we can keep pressure on the remaining al Qaeda forcesand prevent them from rebuilding their capacity, our large-scale military engagement should endimmediately. We have averaged more than 50 US fatalities every month in Afghanistan in

2011.c Every day that we manage to move up the timeline for redeploying our forces from a warthat has achieved its objectives means more American lives saved. Every month that we move upthe timeline can save us billions of dollars.

Summary and Conclusion There are more than 1,000 military bases overseas, including 268 in Germany, 124 in

Japan, and 87 in South Korea. The total cost of maintaining all troops, equipment, fleets,and bases overseas is $250 billion annually.

It costs about $1 billion more per year to maintain about 56,000 Army forces in Germanyalone than if those troops were stationed in the United States.

Officials from both parties have pointed out that our global troop presence is poorlypositioned in a post-Cold War world and no longer helping to advance our nationalsecurity interests.

We can effectively and flexibly project power and protect our interests in much of theworld through enhanced naval power.

We have spent $1.2 trillion so far in Iraq and Afghanistan, and should work to speed theredeployment of troops out of both theaters so that they are brought home as soon aspossible.

lxxxii http://www.cbo.gov/doc.cfm?index=5415&type=0&sequence=3lxxxiii

http://www.fpif.org/reports/the_cost_of_the_global_us_military_presencelxxxiv

http://www.fpif.org/articles/too_many_overseas_bases
http://www.cbo.gov/doc.cfm?index=5415&type=0&sequence=3http://www.fpif.org/reports/the_cost_of_the_global_us_military_presencehttp://www.fpif.org/articles/too_many_overseas_baseshttp://www.fpif.org/articles/too_many_overseas_baseshttp://www.fpif.org/reports/the_cost_of_the_global_us_military_presencehttp://www.cbo.gov/doc.cfm?index=5415&type=0&sequence=3


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lxxxvhttp://www.fpif.org/articles/too_many_overseas_bases

lxxxvihttp://www.fpif.org/reports/the_cost_of_the_global_us_military_presence

lxxxviihttp://www.fpif.org/articles/too_many_overseas_bases.This estimate does not include

some of the subsidies that our allies pay to defray some of the cost.lxxxviii

http://www.cbo.gov/doc.cfm?index=5415&type=0&sequence=3lxxxix

http://www.cbo.gov/doc.cfm?index=5415&type=0&sequence=3xc

http://www.cbo.gov/doc.cfm?index=5415&type=0&sequence=3xci

http://www.cbo.gov/doc.cfm?index=5415&type=0&sequence=3xcii

http://www.fpif.org/articles/too_many_overseas_basesxciii

http://www.nytimes.com/2011/11/07/world/panetta-weighs-military-cuts-once-thought-

out-of-bounds.html?_r=1&pagewanted=allxciv

NSN citationxcv

http://www.nytimes.com/2011/11/13/sunday-review/a-new-era-of-gunboat-

diplomacy.html?pagewanted=2&_r=1&sq=gunboat&st=cse&scp=1xcvi

http://www.nytimes.com/2011/11/13/sunday-review/a-new-era-of-gunboat-

diplomacy.html?pagewanted=2&_r=1&sq=gunboat&st=cse&scp=1xcvii

http://siadapp.dmdc.osd.mil/personnel/MILITARY/history/hst0912.pdfxcviii

http://www.cbo.gov/doc.cfm?index=5415&type=0&sequen

bysiewicz accountable plan

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