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As protesters have refused to yield in their “occupations” of public places, they have gained momentum and support throughout the country. Yet for Congress it has been business as usual. Elected representatives there have virtually ignored the outrage expressed by protesters on Wall Street and across the country. But the message will keep coming until Congress finally demonstrates that it is listening. A good start would be a tax on financial speculation.
Just two years after the height of the financial crisis, The Wall Street Journal reported that the top 25 firms on Wall Street paid out a total of $135 billion in compensation in 2010, providing an average compensation of $141,000 per employee. Meanwhile, 25 million Americans are unemployed or underemployed. Wages have remained stagnant, and median household income is down 7% from 2000, while the largest corporations and executives have seen record profits and bonuses year after year.
The protesters know these economic realities all too well. Not so those in corporate boardrooms and in Congress, who are insulated by the bubbles in which they live.
The politicians—Republicans and Democrats alike—who continue to ignore the will of the people may face a rocky campaign season. A recent Reuters/Ipsos poll revealed that 82% of respondents were familiar with the Occupy Wall Street movement and an NBC/Wall Street Journal poll showed that Americans supported the protests by a 2-to-1 ratio (37% for and 18% against). Meanwhile, a Pew Research Center poll in early October found that nearly half of Americans couldn’t name even a single Republican presidential candidate. These numbers should be giving corporate plutocrats a scare.
The prospect of a financial-speculation sales tax already is worrying them. In late September, the U.S. Chamber of Commerce, Financial Services Forum and Business Roundtable, organizations that represent the interests of the most powerful corporations and financial-services companies in the world, wrote Treasury Secretary Timothy Geithner to express their opposition to such a tax. They spoke for the 1% they represent, not the 99% whom Occupy Wall Street aims to elevate and who have to pay a 5%-8% sales tax on the necessities of life.
Occupiers throughout the country are pushing elected officials to break the corporate stranglehold on our economy. Both Rep. Peter DeFazio (D., Ore.) and Sen. Tom Harkin (D., Iowa) have proposed legislation in the past that would enact a 0.25% tax on the value of stock, bond and derivatives transactions.
But that is far too small. National Nurses United and other progressive groups believe that we would be better served by a rate of 0.5%. This could help curb the wheeling and dealing on Wall Street and raise hundreds of billions of dollars in revenue to help with our country’s economic recovery. According to estimates from a 2009 Center for Economic and Policy Research paper, a small tax perhaps ranging from one-half to one-hundredth of a percent, depending upon which financial product is taxed, could reap $350 billion.
This tax offers another significant benefit: It has the potential to curb risky speculative trading that contributes little real economic value. The Capital Institute’s John Fullerton has stated that a financial speculation tax could have a significant impact on the high-frequency trading and other “quant” trading strategies that now comprise an astonishing 70% of vastly bloated equity-trading volume. Over the past few decades, trading volume has grown exponentially. In 1995 the total shares of stock traded on the Nasdaq and the NYSE, not including derivatives and other options, was 188 billion. By the peak of the financial crisis, in 2008, this annual number had skyrocketed to three trillion.
Critics argue that this tax would be borne by ordinary investors, retirement funds or mutual funds. But these arguments fall flat when one considers the enormity of speculative trading that occurs in the stock market. Sen. Harkin, Rep. DeFazio and others in the past few years have proposed protecting ordinary investors from the direct effects of the tax by providing exemptions for mutual funds, retirement funds and for the first $100,000 in trades made annually by an individual.
On Nov. 3, the National Nurses United will rally in Washington, D.C., in front of the U.S. Treasury where they will call on Treasury Secretary Geithner and President Obama to listen to the voices of the 99%—instead of the hundreds of millions of dollars the 1% spend every year on lobbyists and campaign contributions—and support a financial speculation tax. This movement has made it clear that they aren’t going away quietly and they want their voices heard.
Already, German Chancellor Angela Merkel and French President Nicolas Sarkozy are pressing for a euro-zone financial transaction tax. The passage of such a tax would be a great start for our representatives in Congress to show that they’ve heard the message. But those who have not heard it—those at the helm of the Wall Street banks, in the corporate board rooms, and those in Congress who are representing corporate interests instead of those of their constituents—they are right to look at the growing discontent across the country with some unease.
Ralph Nader is a consumer advocate, lawyer and author of Only the Super-Rich Can Save Us!
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