“It’s Time To Tax Financial Transactions”: Here At Last Is An Idea Whose Time Has Come
On Friday at midnight, the sequester kicked in, triggering $85 billion in deep, dumb budget cuts that sent “nonessential personnel”— such as air traffic controllers — packing.
Not to worry, though: Wall Street’s day was pretty much like any other. Billions of dollars in profits were made off of trillions of dollars in financial transactions. And the vast majority of those transactions were conducted tax-free.
Moral of the story: What else is new?
Crash the economy? Free pass. Prevent planes from crashing? Pink slip.
We don’t need a team of policymakers to tell us this isn’t good policy, or that it needs changing. But on Thursday, we heard policymakers propose exactly that: a change.
Sens. Tom Harkin (D-Iowa) and Sheldon Whitehouse (D-R.I.), along with Rep. Pete DeFazio (D-Ore.), unveiled a bill that would place a light tax on all financial transactions — three pennies on every $100 traded.
The good news is that it’s a tax so small it could be mistaken for a rounding error. It’s so small, Wall Street could easily afford it and the average E-Trade investor would barely notice it. If this were a tax on coffee, it would cost you $1 for every 800 cups you bought at Starbucks.
But there’s even better news. This insignificant tax raises a significant amount of revenue — $352 billion over the next 10 years, or enough to refund about one-third of what the sequester will slash from the federal budget. It’s also enough to put many air traffic controllers back to work, Head Start teachers back in preschools, and crucial government programs back in business.
As the saying goes, “Nothing can resist an idea whose time has come.”
And after years of Wall Street excess, and at a moment when new revenues are badly needed, the time has surely come for a financial transaction tax .
Indeed, support for such a tax has never been stronger — or broader. Many on the progressive left have long favored it . Now, though, another group of bleeding-heart liberals, otherwise known as the American people, is on board. When it comes to cutting the deficit, 6 in 10 Americans prefer taxing the financial industry to cutting social spending.
But this idea doesn’t just have the masses on its side; it has the elites, and even some Republican elites. Once championed by the granddaddy of liberal economics, John Maynard Keynes, the banner of a financial transactions tax has been picked up by conservative economists including Sheila Bair, George W. Bush’s appointee to the Federal Deposit Insurance Corp.
After all, the tax isn’t just a good revenue raiser. It’s smart regulatory reform.
The high-frequency traders that now dominate our markets would be hardest-hit by the tax. A top economist recently concluded that their lightning speed, algorithm-driven trading drains profits from traditional investors. And analysts fear that such mass trading strategies could lead to disaster if markets behave unexpectedly.
The new tax would discourage these kinds of trades, which would be a good thing.
Europe, at least, seems to agree. Eleven nations, led by the conservative German government, are on track to start collecting the tax by January 2014. Expected revenues: $50 billion per year.
Of course, we’re talking about a tax on Wall Street.
It’s no wonder that, over the past few weeks, K Street appears to have upped the financial sector’s retainer. Their lobbying effort against the tax — here and in Europe — is in full swing.
Even the Obama administration has been convinced to come out against the tax in the United States. And they’re pressuring Europeans to water down their version by insulating American banks. What’s the logic driving this opposition?
Some have argued that, historically, these taxes have been ineffective because of widespread evasion. But they’re cherry-picking a few badly designed examples, such as Sweden’s lemon of a tax from nearly 30 years ago. This is like saying cars don’t work because you bought a Datsun in the ’70s.
Many countries have implemented such taxes effectively. The United Kingdom, for example, manages to raise more than $5 billion per year on a 0.5 percent tax on stock trades alone.
Another common argument is that the tax will be passed on to mom-and-pop investors. The just-introduced U.S. legislation addresses these concerns by providing tax credits for contributions to typical middle-class investment accounts, including 401(k)s. Investment funds would still be taxed on their trades, but this could encourage longer-term productive investment instead of the short-term speculation that adds little to no value to the real economy.
If the Obama administration is serious about fair taxation and a smart approach to the deficit, it should change its position. Rather than trying to derail Europe’s efforts, it should cooperate with Europe to ensure that the tax there is effectively enforced. And the administration should build support in Congress, including among Republicans.
Yes, we’ve all heard House Speaker John Boehner’s line that the debate over revenue raising is over. We also remember former President George H.W. Bush’s line, “Read my lips, no new taxes,” and how quickly his lips starting saying something else.
For tea partyers, wouldn’t a tax on Wall Street, the beneficiaries of the bailout they so reviled, be less objectionable than most other revenue options?
Sequestration is a septic wound, self-inflicted by lawmakers who can’t agree on anything. Here, at last, we have a smart idea with widespread support — Americans and Europeans, populists and economists, progressives and conservatives.
After Friday’s dumb budget cuts, a little smart policymaking would be nice for a change.
By: Katrina vanden Heuvel, Opinion Writer, The Washington Post, March 5, 2013
“The B-Word”: Paul Ryan And The GOP Think Voters Are Dumb
Do House Republicans think voters are stupid? Why yes, yes they do, judging by the latest messaging the GOP is preparing to roll out in its big budget push. In the Republican view, simple voters find notions like “balance” confusing when it comes to issues of taxes, spending cuts, and the budget.
Politico has an article up raising the curtain on the Republican PR effort around the budget plan Rep. Paul Ryan will unveil next week. About halfway through, it contains this nugget on the Republican messaging strategy
“Democrats’ calls for a ‘balanced approach’ are clearly poll-tested, but it’s because people associate the word ‘balanced’ with a balanced budget — exactly the opposite of what Democrats’ budgets actually do,” the aide said. “Look for Republicans to go on offense on Democrats’ ‘balanced’ rhetoric by pointing out that there is nothing ‘balanced’ about Senate Democrats or the president’s budgets — in fact, they never balance at all.”
In short “balanced,” in the view emanating from Paul Ryan world, is some sort of magical word which simple voters are easily confused by. They hear “balanced” and—apparently incapable of absorbing the words around it in a given thought—just assume it means “balanced budget.” Now I get the concept of the low information voter—people who pay only passing attention to politics and so have details and often entire facts wrong—but this is an assumption of a low intelligence voter. You voters are too stupid to realize it, the messaging goes, but you really agree with us. You just need to understand that you’re easily confused by concepts like “balance.”
While we’re here let’s quickly reality-test the assertion, just for kicks. What do polls say about a balanced approach? Do voters really prefer Obama’s balanced way of dealing with deficits, and if so is it because they’re ensorcelled by the b-word, or do they get the substance? Conveniently, PolitiFact.com recently checked out the assertion that most voters agree with Obama’s approach. Their conclusion: “Obama said of a balanced approach to deficit reduction that ‘the majority of the American people agree with me and this approach, including, by the way, a majority of Republicans.’ … The majority of the polls we found support the president. We rate the president’s statement Mostly True.”
They didn’t check whether simpleton voters were just entranced by the “b-word,” but they did cite poll after poll after poll where the word wasn’t used but rather the concept—dealing with the budget deficit with a mix of spending cuts and tax increases—was explained, and majorities of voters favored it over a spending-cut-only approach. This is in line with the preponderance of polls which also show that most voters favor notions like compromise generally.
In short, “balance” polls well on the substance so Republicans are trying to neutralize the concept as a talking point by—in a Orwellian bit of redefinition—muddying the meaning of the word.
The rest of the Politico article does provide some insight into Ryan World. The budget won’t cut much more than last year’s, it says, even though it balances the federal books twice as fast as the last version (Ezra Klein explained why yesterday). And, reporters Jake Sherman and David Nather write, Ryan aides are unafraid of a backlash against the plan:
Politically, House Republicans think it carries next to no risk: Conservative truth-telling, they say, is in vogue. Two years after Ryan’s decision to transform Medicare into a voucher-like system, the party’s presidential ticket won seniors by 17 percentage points and House Republicans are still comfortably in the majority, even if Mitt Romney did lose the presidency with Ryan as his running mate.
What’s a presidential level thumping between friends? Especially when voters are such nimwits. What’s striking is what a hoary talking point this is. Has there been any point in the last, say, four years when House Republicans would have said that “conservative truth-telling” wasn’t in vogue? (And the notion of “conservative truth-telling” is especially funny when it comes to Paul Ryan and his budgets.)
A line much later in the Politico piece nicely sums things up: “All of this doesn’t mask a larger problem for Republicans: Their budget messaging stinks.”
By: Robert Schlesinger, U. S. News and World Report, March 7, 2013
“Devolution”: Let’s Adopt These Planks From GOP’s National Platform
From Rick Perry to Rick Santorum, many Republican sparklies say they reject the science of evolution, favoring instead the “science” of the Bible, including some of its interpreters who claim the Earth is not 4.5 billion years old, but has been around only about 6,000 years. Georgia Rep. Paul Broun (who ironically serves on the House Science Committee) even calls evolution “lies straight from the pit of hell.”
But while they dis Charles Darwin and the evidence of evolutionary progression, the GOP as a whole seems firmly committed to “devolution” as its own operating principle. Webster’s Dictionary explains that to devolve is to “degenerate through a gradual change” — synonyms include to crumble, decline, regress, sink … worsen.
The party’s leaders are presently in an intramural tussle over how they should cope with last year’s electoral drubbing they took from women, Latinos and young voters. Tea Party Republicans argue for going deeper into the right-wing weeds by promoting a new McCarthyism focused on the bugaboo of a United Nations takeover of America. Others insist the party simply has a packaging problem, so they’re seeking softer ways to say “kill Medicare” and studying how to say “cut taxes for the rich” in Spanish.
But now here’s some unexpected news!
It comes from what purports to be an official document of the National Republican Party. And — wow! — the policy positions it contains show that top thinkers and strategists really are serious about coming to their senses and rejecting the plutocratic extremism and far-right wackiness that has stained their recent presidential, congressional and gubernatorial campaigns.
Right at the top, this 18-page manifesto proclaims that, “Our government was created by the people for all the people, and it must serve no less a purpose.” ALL the people!
Forget last year’s ridiculous pontifications by Mitt Romney and others dividing America into virtuous “creators” (like themselves and their billionaire backers) and worthless “moochers” (like you and me) — this document abounds with commitments to the common good. “America does not prosper,” it proudly proclaims on page three, “unless all Americans prosper.” Shazam — that’s downright democratic!
And then there’s this: “Government must have a heart as well as a head.” And this: We must conserve and safeguard “our natural resources for the greatest good of all, now and in the future.” And this: “The purpose of the Republican Party is to (build) a dynamic prosperity in which every citizen fairly shares.”
And how’s this for a complete turnaround: “Labor is the United States. The men and women, who with their minds, their hearts and hands, create the wealth that is shared in this country — they are America.” Holy Koch brothers, share the wealth?
Yes, and how about this: “The protection of the right of workers to organize into unions and to bargain collectively is the firm and permanent policy of the (Republican Party).” Eat your heart out Scott Walker, Rick Snyder, John Kasich and you other labor-bashing GOP governors!
The document also offers unequivocal support for (of all things) the United Nations, as well as for the U.S. Postal Service and such progressive-minded policies as equal rights for women, expanding our national parks, “vigorous enforcement of anti-trust laws” and raising the minimum wage. New enlightenment in the Grand Old Party. Hallelujah!
Can all this be true? Yes — except it’s not new. This document is the Republican Party platform … of 1956. Fifty-seven years ago, under the presidency of Dwight Eisenhower, Republicans not only said sensible things like that, they put them in their national party platform as pledges to the American people. How far they’ve devolved, huh?
Of course, the last thing Republican leaders want is advice from someone like me, but I’m happy to give it anyway, free of charge. Here it is: If you ever hope to evolve politically, ponder going back to the future. You’re welcome.
By: Jim Hightower, The National Memo, March 6, 2013
“Straw Purchasing”: Senate Gun Trafficking Bill Advances With Only One Republican Vote
Gabrielle Giffords on Wednesday urged senators to be “bold” and “courageous” in acting now on gun violence legislation, specifically universal background checks.
Seven Republicans sitting on the Senate Judiciary Committee, including Jeff Flake from Giffords’ home state of Arizona, couldn’t even bring themselves to vote for a federal gun trafficking bill, which would for the first time enhance criminal penalties for straw purchasers and gun traffickers.
On Thursday morning, the Senate Judiciary Committee voted to advance the bipartisan Stop Illegal Trafficking in Firearms Act of 2013, with 10 Democrats and only one Republican, Sen. Chuck Grassley (R-IA), voting to bring the bill to a full Senate vote, which will likely take place after Congress returns from April recess.
The seven Republicans who voted against the measure — whose chief sponsor is committee chairman Sen. Patrick Leahy (D-VT) (pictured) and is co-sponsored by Republicans Mark Kirk (IL) and Susan Collins (ME) — are: Orrin Hatch (UT), Jeff Sessions (AL), Lindsey Graham (SC), John Cornyn (TX), Mike Lee (UT), Ted Cruz (TX), and Flake.
ThinkProgress quotes Cornyn as saying “my concern is that this bill is a solution in search of a problem. Straw purchasing for purpose of directing guns to people who cannot legally attain them is already a crime,” in explaining his opposition to the federal gun trafficking law.
Giffords and husband Mark Kelly’s new gun safety advocacy group, Americans for Responsible Solutions, states on its website why the gun trafficking law is important. They say, contrary to Cornyn’s assertion, that “law enforcement can only go after gun traffickers for what are essentially paperwork violations,” and that these offenses generally lead to minor sentences (the law would stiffen penalties for straw purchases to up to 25 years). They also state that “one percent of licensed firearm dealers account for 57 percent of guns recovered in crimes.”
The committee is also set to consider three other gun bills, including universal background checks, a ban on assault weapons, and a ban on high-capacity magazines. Although a majority of Americans support all three proposals, many congressional Republicans and the National Rifle Association oppose any new gun laws.
“The number one thing we can do to stop gun trafficking is a universal background check system. But Congress should also institute stiff penalties for straw purchasers and pass a clear federal statute that makes gun trafficking a serious crime,” Americans for Responsible Solutions says.
By: Josh Marks, The National Memo, March 7, 2013
“It’s ACORN’s Fault”: Fake Prostitutes, Fake Terrorists, And The Trouble With Conservative Media
Just before the 2012 election, the Daily Caller, a website run by Tucker Carlson, produced a blockbuster report claiming that New Jersey senator Robert Menendez had frequented underage prostitutes in the Dominican Republic, and they had the prostitutes’ testimony to prove it. Bizarrely, mainstream media did not pick up the story, Menendez was re-elected, and to almost no one’s surprise, the whole thing now appears to have been a slander cooked up by Republican operatives. How did such a thing happen? The answer is, it’s ACORN’s fault. Hold on while I explain.
It turns out that Republican operatives pitched the Menendez story to ABC News at the same time as the Daily Caller, but after looking into it ABC decided it was probably bogus, as they explain here. It was pretty obvious the women were being coached, and their stories just strained credulity:
Her account of sex with Menendez in the video interview was almost word-for-word the account given by two other women who were produced for interviews about having sex with the man they knew only as “Bob.”
Asked during the interview with ABC News how she knew that the man named “Bob” was a United States Senator, one of the other women said she had put the name “Bob” into a web search site and a picture of Menendez popped up.
Only a liberally biased journalist could be at all skeptical of that story, which explains why ABC passed on it, and the Daily Caller ran with it. And lo and behold, one of the women eventually came forward with an affidavit saying she had been paid to accuse Menendez of patronizing her services. And this only the latest in a string of instances in which conservative media outlets have embarrassed themselves by “reporting” things that turn out to be absurdities or outright fabrications, from Jeff Sessions’ crazy GAO report to Chuck Hagel’s relationship with the fictional “Friends of Hamas” (Michael Calderone has a long story exploring this issue).
What does this have to do with ACORN? You’ll remember that the group, which had been mismanaged for a long time, was brought down by a video in which young James O’Keefe claimed he had gone into ACORN offices dressed as a pimp, with a girl he claimed was an underaged prostitute, and got advice on how to set up his prostitution business from ACORN staff. It turned out that much of what O’Keefe said was false (he didn’t actually wear the pimp outfit when visiting the offices, and he got tossed out of one ACORN office after another before finally getting some employees on tape giving what seemed like helpful advice), but the damage was done. Conservative media at all levels swung into action against ACORN, joined by Republican politicians. In short order, the group disintegrated, and went out of business in 2010.
This weekend, Up With Chris Hayes featured a panel with a group of conservatives about the state of the conservative media, and during the discussion, Hayes made an excellent point, tying the buffoonery of outlets like the Daily Caller, Breitbart, and the Washington Free Beacon back to ACORN. “The ACORN thing ruined a lot of conservative media,” he said, because it worked. O’Keefe targeted ACORN, and when it was all over, ACORN no longer existed. “It sent everyone chasing down this rabbit hole: what’s going to be the next undercover sting operation that destroys part of the left?”
I’d argue that looking for something that will produce the next ACORN—an actual scalp—is part of the explanation for why these outlets do what they do how they do it, but at heart it’s an issue of psychology. It’s about how they view liberals in general and Barack Obama in particular: not as people who are wrong or misguided, but deeply, fundamentally, corrupt and immoral. So even when these conservative journalists hit upon a story that may have some substance to it, their fervent belief that corruption and immorality lies beneath every administration policy and beats within the heart of every Democrat ends up twisting their approach to the story and eventually destroying their credibility. It will never be enough for them to discover that, say, a program to track guns moving from the United States to Mexico was incompetently handled, and the people responsible should be held accountable. Instead, they have to believe that it was all part of a grand conspiracy to send jackbooted thugs into Americans’ homes to take away their guns, a conspiracy that went all the way to the Oval Office. When it turns out not to be so dramatic, they end up looking foolish.
And when you’re so convinced that your opponents are corrupt to their very core, crazy sting operations exposing that sinister corruption begin to look like the appropriate way of attacking them. Why bother poring through the details of policy, when those bastards are probably using underage prostitutes and stealing money and intentionally letting Americans die in war zones and consorting with terrorists and who knows what else?
As I argued last week, the problem for the right goes beyond the media people themselves; it runs through their elected officials and the audiences to whom both are appealing. And lo and behold, it turns out that the budget bill House Republicans just submitted contains a provision mandating that no government funds be given to ACORN, which is kind of like prohibiting the government from buying any Wang computers. But if you can’t find any new corruption to attack, you might as well go after an organization that ceased to exist three years ago. That’ll show ’em!
By: Paul Waldman, Contributing Editor, The American Prospect, March 6, 2013
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