Lew’s Latest Shows US Increasingly Out of Step in Holding Wall Street Accountable
How far behind the rest of the world can we continue to fall on holding the Wall Street traders and tycoons to account for the mess they made of our economy? The sharp contrast Monday between the Obama administration and Europe in statements about a financial speculation tax shows the gap appears to be widening.
We’ve seen this picture before, and the U.S. is not about to get an Oscar.
Just last month, a study by the National Research Council and the Institute of Medicine found that the U.S. ranks last among 17 affluent countries in life expectancy (all the others have national healthcare systems, unlike our dysfunctional insurance model).
Now we’re losing ground in another arena – making the financial speculators pay their fair share for revenue needed for economic recovery.
The contrast was brought into sharp focus Monday in conflicting statements from Jack Lew, the Obama administration’s incoming Treasury Secretary, and European Union Tax Commissioner Algirdas Semeta.
In a Washington speech, Semeta described the rapid movement of 11 EU nations, including such giants as Germany, France, Italy, and Spain, to implement a financial transaction tax. The same day Bloomberg news was reporting a dismissive statement by Lew on an FTT for the U.S.that even went beyond public statements about an FTT from the outgoing Treasury Secretary Timothy Geithner, who was well known as a champion of Wall Street.
The irony of Lew’s position could not be greater in a week in which Washington is frantic with the oncoming sequestration and the obvious need for new revenue sources to protect Main Street communities.
A major answer is staring us in the face – the Robin Hood tax.
The Inclusive Prosperity Act, authored by Rep. Keith Ellison, and expected to be reintroduced soon, would infuse up to $350 billion every year. The revenue would be used for such critical needs as jobs, healthcare, housing and fighting climate change and AIDS, by setting a small tax of just 50 cents on every $100 of stock trades and less on other financial instruments.
Virtually every other major market has already figured this out, as Semeta pointed out.
“The financial sector is under taxed compared to other sectors,” said Semeta. “We (the EU) are ready to lead the way.” Other EU countries signing on include Portugal, Belgium, Austria, Greece, Estonia, Slovenia, and Slovakia, joining with the fastest growing markets in Asia and other major world exchanges, some 40 nations in all.
“The tax also has supporters here which I want to encourage,” said Semeta. That would be the growing Robin Hood movement, which has held multiple actions promoting the tax, most recently during Lew’s confirmation hearing earlier this month.
This is not a hard sell for nurses who daily see the worsening health consequences of persistent economic crisis facing many families and know our communities need the help a tax on Wall Street can provide.
So why do we have a Treasury nominee who is showing more loyalty to Wall Street than to Main Street?
In a statement by Lew to written questions by Senator Orrin Hatch, top Republican on the Senate Finance Committee, Lew even made the outlandish objection that an FTT “would be vulnerable to evasion.” That hasn’t spurred our government to crack down on the legion of corporate tax evaders, including some of the world’s biggest banks and oil companies who regularly avoid paying taxes and even get rebates.
But, in fact, an FTT would be simpler to enforce since trading is highly automated and more than 70 percent of trades go through computerized central clearing houses, making it easy to monitor and extremely difficult to evade.
An FTT would also serve to stabilize markets by limiting high-speed, high-volume trades and by constraining price spikes in essentials, like food and gas, tied to speculative trading. In his Washington speech, Semeta noted that high-frequency trading has led to transactions that “do not have any social value,” adding the tax would “reorient the financial sector” around the real economy.