Hawkins, Green Party Candidate: State Bank Needed for Job Creation

Howie Hawkins for Governor - Green Party
Media Release
www.howiehawkins.org - www.gpny.org


For Immediate Release: October 20, 2010
For More Info:
Howie Hawkins, 315 474-7055, 315 317-5084 (c)
Mark Dunlea, 518 860-3725

(Albany) Howie Hawkins, the Green Party candidate for Governor, said today that the State of New York should establish a state-owned bank to finance job creation in new and expanding enterprises.

Hawkins was joined at the press conference by consumer advocate Ralph Nader, who highlighted the need for the state to end its fiscal crisis by stopping the annual $16 billion rebate of the stock transfer tax to Wall Street speculators.

Hawkins also said he wanted at least two more gubernatorial debates before the election on November 2. At least one should be in upstate New York.

"Monday night's debate was not enough to fully vet the candidates. We face serious problems like persistent high unemployment, potential climate catastrophe, recurring structural deficits, and dysfunction in Albany. The voters deserve more than the barrage of ads the major party candidates are buying to sell themselves to voters," Hawkins said.

In calling for a state bank, Hawkins said, "The hugely successful public Bank of North Dakota was set up in 1918 to free farmers and small businessmen from the clutches of out-of-state bankers and railroad men. Today New York businesses and consumers need a public Bank of New York to free local businesses from a predatory Wall Street and finance the investments needed to restore jobs and prosperity to Main Street," Hawkins said.

"Despite a federal bailout amounting to trillions of dollars, the big Wall Street banks are putting their money into short-term speculation, not long-term investments in new and expanding businesses in New York State. We need a state bank whose mission is to invest in the real economy of producing goods and services in New York. The state bank will save the state taxpayers enormous money in interest payments that now go to Wall Street, which is not reinvesting its earnings in New York's economy," Hawkins added.

Hawkins said the state-owned Bank of North Dakota explains why that state is the only one in the union not facing a budget deficit. He noted that North Dakota's unemployment rate is the lowest of any state at 3.7% when the national rate is 9.6%.

"North Dakota's farms and businesses have access to credit that keeps their state's economy, employment, and tax revenues up, while the rest of the country is starved for credit and going down," Hawkins said.

"The state bank would be capitalized by the deposits of state tax revenues and from private individuals, businesses, and pension funds that want to invest in the future of New York. This capital would then be invested in productive ventures in New York State that benefit the people. The state bank will keep the interest collected for the benefit of the people, instead of seeing that interest further enrich the same giant Wall Street banks that missed the $8 trillion housing bubble that tanked the economy when the bubble burst," Hawkins said.

Hawkins noted that the Bank of North Dakota has enabled the North Dakota economy to avoid dependence on the big Wall Street banks that are reluctant invest in business expansions and start-ups by partnering with community banks and credit unions to finance business projects that these smaller local institutions cannot finance on their own. A state-bank would have the state's massive asset base to back up its credit, including its cash, investments, buildings, land, parks, and state-owned utilities and infrastructure. The state bank would also be able to engage in long-term planning and risk-taking without the constraints of impatient shareholders seeking short-term gains and management taking huge risks on speculative investments in order to win huge bonuses on top of over-sized salaries, according to Hawkins.

Hawkins said the public bank he proposes would be fundamentally different from the public infrastructure banks proposed by Democrats Andrew Cuomo at the state level and President Obama at the federal level.

"The Cuomo/Obama proposals are the kind of financing that turned the MTA into an ATM for bankers and forced transit workers and transit users to pay for the huge debt service in job cuts and fare increases. Their infrastructure banks are not really public banks. They would function as public giveaways to the big private banks. In addition to paying the actual constructions costs, the taxpayers would also be saddled with hefty interest payments. Instead of increasing our public debt and payments of tax dollars to banks, we need to be fiscally responsible and use progressive taxation raise the revenues needed to pay for infrastructure investments as we go," Hawkins said.

Hawkins said the state bank would also be different from the state's hundreds of other state authorities because it would be democratically structured with a publicly elected board. He said the state's other public authorities were often examples of crony capitalism that were created by politicians to give campaign contributors access to tax-free bonding for their private business ventures. He said most of the authorities should be abolished, while the ones that truly serve a vital public purpose, such as the New York Power Authority, should be democratized to make them accountable to the taxpayers.

Hawkins added that New York's fiscal crisis could be more easily resolved through progressive tax reforms than other states because New York has the most unequal income distribution of any state in the union. Hawkins echoed Nader in calling for an end to the rebate of the Stock Transfer Tax that puts the state into deficit. Last year that tax generated $16 billion is revenue that was rebated back to Wall Street. The state would have had a $7 billion surplus instead of a $9 billion deficit to close if it had kept those revenues instead of rebating them.

Hawkins said that a restoration of the 1972 progressive income tax structure would raise $8 billion in additional revenue while giving 95% of New Yorkers a cut in income tax rates. He also called for a 50% tax on the cash bonuses that bankers are paying themselves out of the trillions in the ongoing federal bank bailout of cash, low-interest loans, and loan guarantees.

"Those three progressive tax reforms would generate a net increase of $25 billion in revenues after the deficit is closed. By depositing $10 billion of that in a state-owned Bank of New York and leveraging that cash reserve up by a conservative 10 to 1 ratio, the state would have $100 billion to lend out for job-creating business start-ups and expansions around New York State," Hawkins said.