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Sanders Votes No on Geithner: “[He’s] More of a Part of the Problem…Than the Solution”

StoryJanuary 28, 2009
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We speak with Sen. Bernie Sanders (I-VT) about his decision to vote against Tim Geithner as Treasury Secretary, Obama’s $825 billion economic stimulus plan, and why the $700 billion financial bailout amounts to “the greatest financial scandal in the history of this country.” [includes rush transcript]

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StorySep 22, 2008Sen. Bernie Sanders, Robert Scheer and Dean Baker on the Proposed $700 Billion Bailout of Wall Street, the Largest Government Bailout of Private Industry in US History
This is a rush transcript. Copy may not be in its final form.

AMY GOODMAN: President Obama visited Capitol Hill yesterday to urge Republican lawmakers to support his economic stimulus plan. The House is scheduled to vote tonight on the $825 billion proposal aimed at creating four million jobs and giving individuals and businesses an infusion of cash.

Obama devoted nearly three hours to separate closed-door meetings with House and Senate Republicans, but many GOP lawmakers remain unconvinced. The bill is expected to pass in the House today with a vote largely along party lines. The Senate is expected to consider a separate bill next week.

Obama’s trip to Capitol Hill came on the heels of major US companies announcing plans to cut more than 75,000 jobs Monday, hitting almost every corner of the labor market. Meanwhile, the Senate confirmed Tim Geithner as Treasury Secretary this week by a 60-to-34 vote. Thirty Republicans voted against Geithner, along with Democratic Senators Russ Feingold, Tom Harkin, Robert Byrd and independent Bernie Sanders.

Senator Sanders joins us now from D.C., independent US senator from Vermont, elected to the Senate in 2006 after serving sixteen years in the House. He is the longest-serving independent member of Congress in American history.

We welcome you to Democracy Now!

SEN. BERNIE SANDERS: Good to be with you.

AMY GOODMAN: Why did you oppose the confirmation of Tim Geithner?

SEN. BERNIE SANDERS: Well, Tim Geithner, to my mind, is more of a part of the problem that got us to where we are today rather than the solution. Geithner was actively involved in the Clinton administration in terms of the deregulatory efforts when he was head of the New York Fed. He was there when Citicorp and other groups made very, very reckless business decisions and really did not raise the red flag that had to be raised. So I happen to think that Obama is off to a very good start, with one exception: I worry very much about the Treasury Department and the continuation of policies which in many ways got us to where we are today.

Bottom line here is Wall Street has done a terrible, terrible disservice, to say the least, to the American people. Their greed, their recklessness, their illegal behavior is causing suffering for tens of millions of people all over our country today, putting us on the verge of a depression. We need a very deep investigation, and we need to hold those people, those crooks, those people who just were incredibly greedy and reckless, we need to hold them accountable. I am afraid that Geithner was more a part of that problem than the solution. So I voted against him for that reason.

AMY GOODMAN: Did you meet with President Obama yesterday when he came to the Hill?

SEN. BERNIE SANDERS: No, he met with the Republicans.

AMY GOODMAN: Larry Summers, the chief economic adviser?

SEN. BERNIE SANDERS: Well, Larry is a — I’ve known Larry for many, many years. But Larry also worked under Bob Rubin. And that whole — you know, when we talk about how we — where we got to where we are today, it is absolutely appropriate to cast a lot of the blame on Alan Greenspan, certainly Phil Gramm. Certainly, the Bush administration has been horrendous, in terms of their deregulatory fever, their belief that if we just give these guys on Wall Street, whose whole life is based on greed, we take away all regulations so that somehow or another they’re going to do the right thing and create prosperity for all Americans. I think you’ve got to be pretty off the wall to believe that. But I have to say, it was not just Alan Greenspan and Phil Gramm and George Bush who hold that view. There were many people in the Clinton administration who held that view, as well. So I have had some concerns, and that’s why I voted against Geithner about the appointments that President Obama has made in that area.

AMY GOODMAN: The stimulus package, the House voting on it now, the Senate will get it in a few days.

SEN. BERNIE SANDERS: Well, this, I think, is a very bold act on the part of President Obama. It is going to be somewhere around $900 billion. I’m not going to tell you that I agree with every single line of it. But bottom line, the goal that we have right now is to prevent this country moving from a deep recession into a depression, which will take us years to get out of. So I think that investing in the unmet needs of America — it’s not only our physical infrastructure, our bridges, our roads, our water systems, which have been neglected for so many years. If we invest in rebuilding that infrastructure — our rail system, transit — we can create millions of jobs. But in addition to that, where President Obama has been very clear and very strong, he understands that the potential for enormous job growth over the next decade lies in breaking our dependency on foreign oil and fossil fuels, dealing with the greenhouse gas emission crisis and global warming, moving us to energy efficiency and sustainable energy.

In this bill, Amy — and people should take a look at it. We don’t know what the final product will be until next week. But what came out of the House is not only a huge investment in our infrastructure, a huge investment in energy, we’re talking about billions of dollars are going to protect our most vulnerable Americans, significant increase in food stamps, other programs to help those people who are falling through the cracks, massive investments in education. We have the highest rate of childhood poverty in the industrialized world. Our childcare system is a disaster. This stimulus package puts billions into Head Start, billions into childcare, billions into making it easier for middle-class and working-class families to go to college. So I think the stimulus package is a significant step forward in changing the national priorities of America, so that we start paying attention to the middle class and working families of our country and, in the process, create three to four million jobs.

AMY GOODMAN: Independent Senator Bernie Sanders, you voted against the more than $700 billion bailout, unlike most of your Democratic colleagues, in October. Now, American International Group, the latest news out, the insurer saved from collapse by government money, after losses on credit default swaps, offered about $400 million in retention pay to employees of the unit that sold the derivatives, according to two people familiar with the situation. I’m looking at a piece at Explain what this is all about, why you’re against the bailout, where this money is going, how there can be accountability.

SEN. BERNIE SANDERS: Well, gee, Amy, I really wish I could. The reason that I voted against the whole bailout, and certainly the main reason, is nobody does understand it. What we know is that then-Secretary of the Treasury Paulson came in after, by the way — and I want everybody to remember this — year after year after year, Bush was telling us, and Paulson was telling us, that the fundamentals of the economy are sound, the economy is doing great. And then one day Paulson calls up members of the Senate and the House. He says, “Oh, by the way, I made a little bit a mistake. If you don’t give me $700 billion in a few days, the international financial system collapses.” I mean, that — talk about irresponsibility, talk about incompetence. That’s one area.

We obviously — the Congress didn’t just give him $700 billion, but I had serious doubts about the competence of the Bush administration to do the right thing. I did not trust that they would be transparent or accountable. They are also all part of the same banking culture. The conflicts of interest of Mr. Paulson, who’s the former CEO of Goldman Sachs, doling out money to Goldman Sachs, Citigroup and many of these other large financial institutions, it just did not taste right to me.

So I think what we can say is, for the first $350 billion, we really don’t know if it did any good, what good it did, where it went. Certainly, when the banks are asked, “Tell us what you have done with this money,” what they are saying to the taxpayers of this country: “Hey, it’s none of your business. So what if it’s your money? We don’t have to tell you.” In terms of the second $350 billion, I think that the Congress should have been more actively involved. What I worry about is that we’re going to pour hundreds and hundreds of billions more, maybe even trillions, into just a rat’s hole, and that money disappears. And I’m not quite sure what the taxpayers of this country are getting.

But we should also understand it is not only this $700 billion. The Fed, with no transparency at all, is lending out trillions of dollars. To whom, we don’t know; under what terms, we don’t know, as well. So I think this whole issue amounts to certainly the greatest financial scandal in the history of this country. And if there is a lesson to be learned, is we cannot go back to the old ways. We cannot deal with “too big to fail.” If it is too big to fail, if an institution is so big that it takes down the economy, let’s break it up right now, so we’re never placed in this position at all. Clearly, in terms of these exotic financial instruments, these derivatives, these credit default swaps, we have not only got to regulate that stuff, we have got to make sure that these things are just not allowed to continue.

AMY GOODMAN: Tax Code 382 — can you explain what it is? What are the taxpayers losing? How did it get passed?

SEN. BERNIE SANDERS: Well, it just is another example. In the midst of all of this, then-Secretary of the Treasury Paulson said, “Oh, by the way, I think I will change tax law, and I will make it easier for large banks like Wells Fargo to absorb the losses and gain a tax break by swallowing up a smaller bank” — in this case, Wachovia. And it seems he did this with, from where I am sitting, with no legal basis at all. You just don’t change law. As a matter of fact, in the House stimulus package, that provision has now —- what Paulson did has now been rescinded. And we think that will happen in the Senate, as well. But the bottom line here, this is $140 billion tax breaks for large banks like Wells Fargo, who are swallowing up smaller banks like Wachovia. And that’s obviously not something that the Secretary of Treasury, in my view, had the legal right to do.

AMY GOODMAN: Are you saying this tax loophole could have been illegal?

SEN. BERNIE SANDERS: Yes, absolutely. I think that’s what most tax experts say. When you’re the Secretary of Treasury, you don’t make law. If you want to change the law, you go to Congress. This was a law. I think he acted illegally. We want to rescind what he did.

AMY GOODMAN: Bernie Sanders, you’re an independent. Where do you fit in with the Democrats and the Republicans right now? Where do you feel your independent voice is most needed?

SEN. BERNIE SANDERS: Well, Amy, you know, I think it is no secret to your listeners and viewers that over the years the Republican Party has become an extreme right-wing party. I think Bush will go down in history as certainly the worst president in modern American history, if not in the entire history of our country. The damage that he did to the United States and to the world, in so many areas, will take us decades to recover from.

I work with progressive Democrats. As you well know, I don’t vote with the Democrats all of the time. I worry quite a bit that there is a lot of big money interests, which influences the Democratic Party as well. So my job is to represent working families and the middle class in my state; to fight for a national healthcare program which guarantees healthcare to all people; to begin to address the growing inequality and the fact that we have the most unequal distribution of income or wealth of any major country on earth; and basically to fight to change the national priorities of our country so that instead of spending huge sums of money on the military and giving tax breaks to billionaires, we protect the people who do the work, the middle-class and working families.

AMY GOODMAN: Senator Sanders, let me ask: you who sponsored legislation that would ban military contractors from Iraq; Obama has not signed onto this, supported this.

SEN. BERNIE SANDERS: Right. I think one of the areas that we have to look at is the whole privatization that has taken place under Bush and before Bush. I think it’s a bad investment for the American people. I was a mayor. I know something about privatization. And that’s also certainly true in the military. Donald Rumsfeld was a big advocate of that. So you have the absurd situation where you have private companies in Iraq making huge sums of money, working alongside of government people who are making a whole lot less. This is an issue -—

AMY GOODMAN: Do you think Bush administration officials should be criminally prosecuted?

SEN. BERNIE SANDERS: I think that you have to take a hard look at everything that Bush did, because if we let them get away with it, it establishes a horrendous precedent for the United States. And I agree with your previous guests, the guests that were on before I am, that we need to take a very hard look at that, and let’s see where the process goes.

AMY GOODMAN: Finally — we’ve got ten seconds — Vermont could get a billion dollars in stimulus money, your state?

SEN. BERNIE SANDERS: Well, Vermont could get a billion, but money is coming all over this country to begin to rebuild our economy, to put people to work and to address many of the unmet needs that we’re currently facing.

AMY GOODMAN: Well, we have to leave it there. Thanks so much for being with us, Senator Bernie Sanders of Vermont.

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Sen. Bernie Sanders, Robert Scheer and Dean Baker on the Proposed $700 Billion Bailout of Wall Street, the Largest Government Bailout of Private Industry in US History

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