Daily Archives: December 4, 2012

12.04.12
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Don’t Push Seniors Off the ‘Fiscal Cliff’

December 3, 2012 by Chuck Idelson

With the November election rapidly fading into memory and the basic building blocks of a civil society once again under grave threat from Wall Street and their acolytes in Washington, nurses and other activists have, once again, had to step up the fight to protect basic programs and make the case for real revenue needed to build a sustainable future.

As December opened, National Nurses United unveiled a stark image of seniors precariously perched on the edge of the “fiscal cliff” and facing a questionable future as the White House and leaders in Congress debated their future.

“Don’t Push Seniors Off the ‘Fiscal Cliff.’ Tax Wall Street” is the message. NNU placed the image on more than 100 buses crisscrossing Washington, as well as on billboards in several cities across the U.S., part of a growing campaign by nurses and others insisting that Washington not throw seniors or American families in general under the “fiscal cliff” bus.

Concurrently, NNU is planning candlelight vigils outside some 20 Congressional offices, from Florida to California, on December 10, at some of them joining with members of a number of unions who are also pressing for a firm hand in Washington.

It won’t be the first time nurses have been in the streets since the election calling on Congress and the President to reject more punishing cuts demanded by those Nobel economist Paul Krugman calls “the deficit scolds,” and support for a meaningful tax on Wall Street speculation, the Robin Hood tax.

On November 14, nurses, HIV/AIDS activists, and other Robin Hood campaigners went to several Congressional offices with a similar message.

“This country has vast wealth but poor priorities,” said NNU Co-President Jean Ross, RN. “Social Security, Medicare, Medicaid, and the food stamp program are the economic bedrock of vast numbers of American families. To reduce these in any way is to do serious harm and lead to more poverty. We as nurses shudder at the thought of more harm to Americans. Don’t do it.”

There’s ample reason for concern. Despite pledges from the President, in meetings with labor and liberal policy groups since the election, and some tough language from a number of Democratic leaders, we’ve seen this movie before.

Nurses and other activists well remember the concessions made by President Obama and other Democratic leaders during first term debt ceiling discussions, and the President’s own statement during the first debate this fall that he and Republican candidate Mitt Romney, then titular leader of the “deficit scold” camp, had no real differences on Social Security. It was a statement that caused lots of angst on the left, and prompted a hurried response from the  campaign that “President Obama will never privatize Social Security or undermine retirement security for middle-class Americans.”

But the mixed signals from Washington in late November remained worrisome. Illinois Sen. Dick Durbin, probably as close to Obama as anyone in the Senate, has dropped broad hints that the White House and top Democrats will agree to at least $400 billion in “entitlement” cuts and probably far more as the carrot to get votes for tax increases for the wealthiest Americans. That’s the price demanded by intransigent Republicans, whose hard line, some seem to have trouble remembering, was fully repudiated by voters on November 6.

What will the cuts be? Presumably some combination, speculated Politico, of “means-testing, raising the retirement age and other ‘efficiencies’ to be named later.”

Those cuts are exactly what nurses and other activists hope to head off. Why?  Four years after Wall Street and the banksters crashed the U.S. and global economies, far too many families are still hurting. The priority in Washington should be economic recovery and revitalization, “building a sustainable full employment economy,” as PERI co-director Robert Pollin as aptly written, not further cuts in critical programs.

Whether emerging under the guise of the Simpson-Bowles recommendations, or negotiations over the debt ceiling, “fiscal cliff,” or a “grand bargain,” nurses and other activists know too many of the proposed solutions would just cause far greater suffering in Main Street communities while once again rewarding the Wall Street gamblers and titans who are the ultimate recipients of any money thrown at the debt. Krugman put it well when he wrote: “The deficit-scold movement was never really about the deficit. Instead, it was about using deficit fears to shred the social safety net.”

There are allies in Congress, of course, who can be counted on to oppose this sham, such as Rep. Keith Ellison who in response to the reported deal said:

“Progressives will not support any deal that cuts benefits for families and seniors who rely on Medicare, Medicaid and Social Security to put food on the table or cover their health costs. Last year, over 80 members of the Progressive, Black, and Asian Pacific-Islander Caucuses stood united in opposing an agreement that cut benefits for these families, and 44 members have introduced a resolution demanding these cuts be off the table.”

Instead of further bailouts for Wall Street, nurses say, it’s time to hold banks and investment firms accountable to revitalize the economies they did so much to damage. The best response is with a robust Robin Hood tax, HR 6411, the Inclusive Prosperity Act, introduced by Ellison for the Robin Hood campaign, which sets a small sales tax on the trading of stocks, bonds, derivatives, currencies, and other financial instruments, with a big bang for the economy, up to $350 billion every year for jobs, healthcare, and other vital needs.

That’s the message nurses are bringing to Washington, with the protests, and the latest ad campaign.

12.04.12
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Ralph Nader on a simple way to avoid the fiscal cliff: Tax stock trades

By Ralph Nader, Published: November 30

In the debate over the “fiscal cliff,” President Obama and congressional Republicans have returned to the proposals that they were sparring over before the election. They remain at odds over key elements of revenue and spending. Yet both sides are unwilling to consider a minuscule tax on financial transactions that could be a major source of income.

A financial transaction tax would apply to purchases and sales of derivatives, options and stocks. The tax would be small, half a penny or less on each dollar of the transaction value, depending on the product. This idea is often called a “speculation tax,” because it would hit hardest at frothy high-volume trading as opposed to sober long-term investment.

Wall Street might object, but taxing its sales is hardly a radical idea. Americans in all but five states pay state sales taxes, ranging as high as 7 percent, every time they buy a car, an appliance, a pair of pants or piece of furniture, but a trader on Wall Street can buy and sell millions of dollars’ worth of financial products each day without paying a cent in sales taxes. A teacher or police officer who buys a $100 pair of shoes in the District or Maryland pays $6 in sales taxes. Meanwhile, if a financial speculation tax were applied to stock trades at a rate of 0.25 percent, a day trader would pay just 25 cents on every $100 worth of stock bought.

A speculation tax isn’t a new idea, either. Congress enacted one in 1914, and it remained in effect until 1966; initially it imposed a tax of 2 cents on every $100 sale or transfer of stock. The late Nobel Prize-winning economist James Tobin proposed a version to curb foreign exchange speculation in the 1970s. And I wrote about it a year ago, urging Congress to use it to show that it wasn’t deaf to the sentiments of the Occupy Wall Street movement.

It is an idea whose time has come once again.

At the heart of the debate over the fiscal cliff is the need to shrink our nation’s deficit while safeguarding a lackluster economic recovery by limiting the financial impact on average Americans. A speculation tax could do just that by raising revenue while having little effect on most Americans’ pocketbooks and reducing the devastation of runaway speculative trading on Wall Street.

According to a joint report from the Center for Economic and Policy Research and the Political Economy Research Institute, a speculation tax could raise as much as $350 billionannually. Even if we make the unrealistic assumption that such a tax would reduce trading volume on the stock market by half, it could still boost federal revenue by $175 billion a year.

Compare that with the policies being discussed in the fiscal cliff debate. Extending the George W. Bush-era tax cuts for all but the top 2 percent — as Obama has suggested — would cost $171 billion a year in lost revenue. Patching the alternative minimum tax to ensure that millions more Americans are not affected by it would cost $40 billion. Continuing to pay emergency federal unemployment benefits would cost $26 billion. A speculation tax could pay for each and every one of these — and then some.

As if its deficit-reducing potential weren’t enough, a financial transaction tax could reduce risky speculative trading that diverts resources from productive economic activity and can be very destabilizing, as the 2008-2009 crash demonstrated. In fact, this summer, more than 50 financial industry professionals, including past and present executives from Goldman Sachs, JPMorgan Chaseand Morgan Stanley, signed a letter to the Group of 20 and European leaders supporting a speculation tax. They pointed out that financial market activity has skyrocketed in the past few decades: The value of transactions is now 70 times greater than the size of the real global economy. Trading volume has grown exponentially, skyrocketing from 188 billion shares of stock traded on the Nasdaq and the New York Stock Exchange in 1995 to nearly 1 trillion in 2011. Each year, the notional value of over-the-counter derivatives traded worldwide totals trillions more.

In their letter, these professionals cautioned that although the main purpose of financial markets is to raise investment capital, allocate resources efficiently and mitigate risk, today’s markets, full of computer-driven, high-frequency trading, often undermine those goals. The Capital Institute’s John Fullerton, a former managing director at JPMorgan, has estimated that nearly 70 percent of equity-trading volume is composed of these types of speculative strategies.

Critics claim that a speculation tax would harm ordinary investors. But here is a reality check: Many of the automatic spending cuts and tax increases on middle-class Americans that are at stake in the fiscal cliff debate would be many times more painful for these investors. And the harmful aspects of a speculation tax can be addressed. Rep. Keith Ellison (D-Minn.), Rep. Peter DeFazio (D-Ore.) and Sen. Tom Harkin (D-Iowa) have proposed a financial transaction tax with mechanisms to protect most ordinary investors, either by exempting individuals with incomes below $50,000 or by providing a credit for the first $100,000 of stock transactions each year.

Other critics worry that a speculation tax would drive trading and wealth to offshore tax havens. However, this argument ignores the fact that Britain already subjects stock trades to a financial transaction tax, which generates billions every year. Forty countries had such a tax in place in 2011. Germany and France have voiced support for implementing one across the European Union.

It is now more than four years since the beginning of the financial crisis, and Americans are still feeling the pain. Unemployment is just below 8 percent, and underemployment hovers around 15 percent.

Meanwhile, the Obama administration has failed to hold the Wall Street banks that got us into this mess accountable. Instead, institutions such as Goldman Sachs, JPMorgan and Morgan Stanley — whose speculative trading arms helped fuel the crisis — all received huge bailouts from Treasury and massive interest-free loans from the Federal Reserve. These banks have a bigger market share than ever. Derivatives remain largely unregulated. And too many firms are still gambling with other people’s money.

But the financial transaction tax isn’t a cudgel for retribution against these institutions. It’s a practical tool to avert the financial woes that economists are predicting if we slide over the fiscal cliff. This tiny tax can produce modest salutary effects on behavior while generating much-needed revenue.

The president and congressional leaders need to find something that hasn’t been present in Washington for quite some time: the courage to place the interests of American workers ahead of the influence of Wall Street.

What’s more, we can use the money. Now is the time to enact — or, more accurately, reenact — a financial transaction tax.

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Ralph Nader is a consumer advocate. His new book, “The Seventeen Solutions,” lays out his prescriptions for curing America’s social and economic ills.

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