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Washington, D.C. — Today, Congressional Progressive Caucus (CPC) Chair Rep. Greg Casar (TX-35) and House Financial Services Committee Ranking Member Rep. Maxine Waters (CA-43) co-led the introduction of a resolution warning of the economic risks posed by an artificial-intelligence-related asset bubble, opposing a bailout of corporations or their business executives impacted by the collapse of an A.I. bubble, and affirming their support for aggressive federal action to protect workers, retirees, and low-income communities who will be harmed by an economic downturn. They were joined by Representatives Danny Davis (IL-07), Chris Deluzio (PA-17), Valerie P. Foushee (NC-04), Jesús “Chuy” García (IL-04), Pramila Jayapal (WA-07), Analilia Mejia (NJ-11), Delia Ramirez (IL-03), André Carson (IN-07), Jan Schakowsky (IL-09), Brad Sherman (CA-32), and Rashida Tlaib (MI-12). “Big Tech billionaires are making increasingly reckless bets on A.I. They got richer off Trump’s deregulation and Republican tax breaks. Now they expect taxpayers to bail them out if those bets go bad. We won’t let them," said CPC Chair Casar. "A.I. companies that fail should go bankrupt, and executives who commit fraud should be held accountable. Federal help should go to workers and retirees.” “Big tech and Wall Street are taking enormous risks with billions in borrowed money to fuel the AI boom, despite growing warning signs of a dangerous bubble and if it all comes crashing down they should not expect taxpayers to rescue them,” said Ranking Member Waters. “We saw what happened in 2008 when reckless Wall Street practices brought our economy to its knees. The banks got bailed out while millions of hardworking Americans lost their jobs, homes, and retirement savings. We cannot let history repeat itself. The American people should never again be forced to foot the bill for billionaires’ reckless bets.” In the resolution, the Democratic lawmakers note that “artificial intelligence-related firms hold trillions of dollars in debt, much of which is raised in opaque and unregulated private credit markets,” and “the price-to-earnings ratio of the stock market is currently almost as high as it was at the peak of the 1990s tech bubble.” The Democratic legislators also point out that “federal regulators have avoided applying robust scrutiny and oversight regarding enormously complicated debt and equity schemes used by artificial intelligence firms” and highlight the Trump White House’s deregulatory focus and conflicts of interest related to A.I. The resolution’s cosponsors commit to avoiding a federal response similar to what occurred during the financial crisis of 2008, where the financial sector received trillions of dollars in liquidity without accountability for senior executives involved in illegal and fraudulent behaviors. Meanwhile, 10 million homeowners lost their houses and tens of millions of workers went years without adequate employment while too-big-to-fail banks enjoyed a massive bailout. The resolution urges the Federal Government, including Congress and key Federal agencies to oppose: - Any measure to rescue insolvent artificial intelligence-related firms or to shield their senior executives from accountability for reckless conduct; - Special assistance like emergency lending or direct capital infusions to prop up insolvent A.I. companies’ operations or prevent their orderly resolutions through ordinary bankruptcy processes; - “Golden parachutes” for corporate executives involved in risky or illegal behaviors that lead to their firms’ insolvency, instead requiring them to be held fully accountable under civil and criminal law and be obligated to return ill-gotten gains like mansions, vacation homes, private planes and yachts, and other assets. The resolution also calls on the Federal Government to support: - Aggressive, direct federal action to support ordinary Americans through federal spending to create jobs, protect state and local government services, and robust unemployment insurance, nutrition support, and housing assistance; - The protection of pension and retirement fund holders who may face devastating losses in the event of a collapse of an A.I. bubble; - Far-reaching reforms to prevent future speculative bubbles, including additional transparency and accountability requirements; - Automatic economic stabilizers—investments in people that start to flow immediately in the event of an economic downturn—that support workers and consumers when financial crises, asset bubbles and other harms create downturns and recessions. The resolution was endorsed by American Federation of Teachers, American Economic Liberties Project, Americans for Financial Reform, the Center for Responsible Lending, Demand Progress Action, Future of Life Institute, Guardrails Action, Indivisible, Interfaith Centre on Corporate Responsibility, Investor Alliance for Human Rights, Jobs With Justice, P Street, and Social Security Works. “Americans are already paying for the AI build-out through higher power bills and a stock market propped up by a handful of companies,” said Morgan Harper, Director of Policy & Advocacy for American Economic Liberties Project. They should not pay a second time with a bailout. When Wall Street’s bets went bad during the financial crisis, the banks got rescued and ordinary people got foreclosure notices. Congressional members are right to reject AI bailouts in advance, and commit to saving real help for those who will be left holding the bag—the American people.” “Tech billionaires and their Wall Street backers are using dangerous tactics reminiscent of the 2008 financial crisis to make trillion dollar bets on AI—and they are putting working people’s money at risk,” said Maya Jenkins, a senior policy analyst at Americans for Financial Reform. “This resolution charts a critically important path for defending people’s economic security from the bubble’s blast radius, opposing billionaire bailouts, and holding corporate executives to account. This is the kind of approach needed to confront mounting financial risks and emerge from the aftermath of the AI bubble with an economy that is fairer and more stable.” “When the housing market collapsed in 2008, the financial industry was prepared to act to ensure that there was a bailout that benefited them,” said Dean Baker, senior economist at the Center for Economic and Policy Research. “It is important that the Congressional Progressive Caucus is stepping forward to make sure that any bailout from the collapse of the AI bubble is designed to benefit the country as whole, rather than the billionaire AI boys who created the problem in the first place.” “Chair Casar, Ranking Member Waters, and the Progressive Caucus should be praised for this resolution and recognized as being at the tip of the spear in ensuring that AI policy focuses on working-class impacts and isn’t simply left to the desires of the handful of billionaires and their courtesans in Congress, said Maya Handa, Senior Advisor, Guardrails Action. “The AI industry is trying to buy our elections and write their own regulations while its biggest players line up IPOs at record valuations. If this turns into a bubble, working-class Americans must not be forced to pay the tab for big tech CEOs’ recklessness and greed. Simply put: there can be no bailout for big AI execs or their financial enablers.” “AI companies and their billionaire executives shouldn’t get to gamble with our economy and democracy, then expect working people to bail them out when their bets on AI go bust,” said Andrew O’Neill, National Advocacy Director of Indivisible. “We learned in 2008 what happens when the government puts impunity for corporate corruption ahead of working families. This resolution draws a clear line: will lawmakers protect AI tech bros or the people they’re supposed to represent?” Read the resolution here. ### The Congressional Progressive Caucus (CPC) is made up of nearly 100 members standing up for progressive ideals in Washington and throughout the country. Since 1991, the CPC has advocated for progressive policies that prioritize working Americans over corporate interests. The CPC champions policies including comprehensive immigration reform, good-paying jobs, fair trade, universal health care, debt-free college, climate action, and a just foreign policy. The caucus is the leading voice calling for bold and sweeping solutions to the urgent crises facing this nation, including ending America’s broken for-profit health care system, raising American wages, eliminating political corruption, supporting the labor movement, and taking action to protect the planet for generations to come. Related Files - CASAR_062_xml.pdf (56.9 KBs)
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