OBAMA ADMINISTRATION
1. President Obama
– White House Press briefing, July 22, 2009:
Reporter Question: Would you consider going a step further than your regulatory reform proposals and supporting a fee on risky activities that go beyond traditional lending?
President: In terms of the …. possibility of fees for transactions that we want to discourage, that is one of the ideas that is going to be working its way through the process. I think at minimum what we want to do is to make sure that to the extent the federal government is going to have to be a backstop, just like the Federal Deposit Insurance Corporation, what everybody is familiar with, FDIC, the reason that when you put your deposits in your bank you can have confidence that they’re insured — that’s paid for through bank fees. We may need to make sure that there is a similar mechanism in place for some of these other far-out transactions. So if you guys want to do them, then you got to put something into the kitty to make sure that if you screw up it’s not taxpayer dollars that have to pay for it, but it’s dollars coming out of your profits.
– Campaign speech, October 2008:
“I’ve proposed a Financial Stability Fee on the financial services industry so Wall Street foots the bill — not the American taxpayer. And as I modernize the financial system to create new rules of the road to prevent another crisis, we will continue this fee to build up a reserve so that if this happens again, it will be the money contributed by banks that’s put at risk.”
2. Treasury Secretary Geithner
Treasury Secretary’s response to Gordon Brown’s support for a global financial transactions tax at the G20 Finance Ministers meeting in Scotland, Nov. 7, 2009:
“A day-by-day financial transaction tax is not something we are prepared to support,” Geithner said in an interview with Sky News. In his concluding press conference, Geithner was asked repeatedly to say why he opposed such a tax on banks and indicated he doubted its effectiveness.
“This idea (of a bank transaction tax) has been around for a long time…I think frankly the experiences are mixed,” he said, expressing an American view that there was no widespread backing for such a tax.
CONGRESS
1. DeFazio bills
In February 2009, Rep. Peter DeFazio (D-OR) introduced the “Let Wall Street Pay for Wall Street’s Bailout Act of 2009,” (HR 1068) which would enact a securities transfer tax of up to 0.25 percent on the purchase and sale of financial instruments. Rep. DeFazio is planning to introduce an updated version of this bill in mid- to late-November. In addition, Rep. DeFazio has introduced a bill that is more narrowly focused on taxing crude oil futures and swaps, to raise revenues for transportation infrastructure.
2. Clyburn
House Majority Whip Jim Clyburn (D-S.C.) told POLITICO: ‘We have to reauthorize that highway bill for at least four years. I would prefer five or six,’ Clyburn said, even if it meant imposing a securities transaction tax on the financial community to cover the costs. ‘There are some painless ways to fund the highway bill,’ Clyburn said. ‘Transaction taxes, that’s a painless way; that’s a painless way. … Where are the shared contributions to all this? If you’re sitting there on Wall Street, if you’re Goldman Sachs, if you’re making all this money, if you got all this federal money [in a] bailout, and you are paying all these big bonuses to your folks, where is your contribution to this recovery? That’s why it’s painless.’
3. Barney Frank
Responding to Clyburn’s comment, House Financial Services Committee Chairman Barney Frank (D-Mass.) told POLITICO: ‘It would be a good thing if we could do it internationally, but those transactions are so internationally mobile you can’t do it in one country,’. ‘Stocks trade on multiple exchanges. That’s one of the few where the business community has a legitimate anti-competitive argument.’
4. Bailout legislation
The Troubled Asset Relief Program (TARP) – the $700 billion financial-bailout bill from 2008 – contains a provision to “recoup” from the financial-services industry in case there is a shortfall in the repaying of money.
5. Existing U.S. tax on trades
Both stocks and commodities are already subject to very small taxes, which are used to finance the Securities and Exchange Commission and the Commodity Futures Trading Commission.
BUSINESS
1. Aspen Institute statement
The Aspen Institute released a statement on Sept. 9, 2009 signed by a number of significant business leaders, including Warren Buffett, Louis V. Gerstner, Jr. (former CEO of IBM,) and the current CEO of Lucent Technologies on “Overcoming Short-termism.” Their first recommendation includes: “implement an excise tax in ways that are designed to discourage excessive share trading and encourage longer-term share ownership.”
2. George Soros
In response to Gordon Brown’s statement calling for a global financial transaction tax, George Soros said the prime minister’s proposals “fit in with everything I’m saying needs to be done … the banks should, when they can, be a source of taxation, having been a drain on taxpayers”. Some form of transaction tax was “in principle a very good idea”.
3. Paul Volcker
Former Federal Reserve Chairman Paul Volcker said in a September 24, 2009 hearing before the House Financial Services Committee that it “might be interesting” if Congress ordered a study of the idea of a transactions tax. But he pointed to the problem of driving transactions to other countries: “That’s the No. 1 problem.”
– Sarah Anderson, Institute for Policy Studies, 11/12/09, saraha@igc.org
