The Buck Starts Here

It seems plausible that payback time has arrived for the international financial community. The principal obstacle to this happening at the moment is the Barack Obama administration’s Treasury Department, which thus far in the financial crisis could be mistaken for the executive committee of Goldman Sachs in disguise. Treasury has opposed every proposal to force the financial institutions whose reckless behavior has been responsible for a crisis that wiped out the jobs, homes, and savings of millions to assume financial accountability for what they have done.

What these institutions can now do, in return for the public funds that rescued them, is to pay off part of the enormous debts assumed by the major nations. As a result of the financial meltdown, all or nearly all the EU states are now over the deficit limit imposed by their own rules, and the rising national debt in the United States has reemerged as a legitimate concern.

Politicians talk about the supposed need to raise taxes now that the emergency funds injected into the world economy are drying up. But how do higher taxes pay for economic recovery? Treasury Secretary Timothy Geithner’s solution is growth. But where is this growth to come from when the stimulus ends, as all agree it eventually must?

Let the bankers give back what they have been given. A proposal rapidly gaining international political support, and a grudging acceptance in the financial community, is...

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About the Author

William Pfaff, a former editor of Commonweal, is political columnist for the International Herald Tribune in Paris. His most recent book is The Irony of Manifest Destiny: The Tragedy of America's Foreign Policy (Walker & Company).