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Bernie Sanders Has Great Timing

Bernie Sanders’ timing is impeccable. In mid-May the Vermont Senator (and contender for the 2016 Democratic presidential nomination) proposed a financial transactions tax (FTT) that could annually raise billions of dollars from the activity of high-speed trading “flash boys” on Wall Street. With trillions of financial transactions executed daily, Sanders’ tax plan, introduced as bills in the Senate, would use the tax revenue to make public college and university tuition free.

Already, countries in the European Union are designing FTTs to tax such stock, derivatives and currency trades. As The Nation explained (May 19), “…the Sanders proposal would bring the United States up to speed with dozens of other nations that have recognized the wisdom of establishing financial transactions taxes. European nations have focused on [FTTs] because, as the European Commission explains, ‘Member States and their citizens want to ensure that the financial sector makes a fair and substantial contribution to public finances. Moreover, the sector should pay back at least part of what the European tax payers have pre-financed in the context of the bank rescue operations’.” [1]

More than 170 U.S. labor, civil rights, religious, environmental, community, consumer and student groups have endorsed the campaign for an FTT [2],which is sometimes called a “Robin Hood tax” or a Tobin Tax (after economist James Tobin, who first proposed such a tax twenty years ago, especially on foreign currency exchange transactions). According to National Nurses United, passage of the bills “would allow the U.S.to join dozens of other nations – including every other major global financial market – in a growing system of financial transaction taxes.” [3]

The reason Sanders’ proposal is so timely (and in a sense, urgent) is that it comes in the midst of all the jockeying around granting President Obama “fast-track” authority to ram through the TransPacific Partnership (TPP) trade and investment agreement. [4] According to a 2012 analysis by Public Citizen’s Global Trade Watch, Article 12.11 of the leaked TPP text “forbids countries from using capital controls or financial transaction taxes.” [5] Subsequently, I have found no indication that this section of the TPP has been rewritten – which may be why other countries have been working quickly to implement FTTs in advance of any TPP deal.

The other reason the Sanders proposal is so timely is that a “cartel” of financial institutions have recently admitted to years of manipulating currency exchange markets to obtain illicit profits. The U.S. Justice Department on May 20 announced nearly $6 billion in penalties for Barclays, Citigroup, JPMorgan Chase, the Royal Bank of Scotland and Bank of America (which admitted no guilt but agreed to the fine), while UBS admitted to wire fraud. [6]

Nonetheless, according to the New York Post (May 20), despite the big fines “Wall Street yawned – with the US-based banks’ stock largely unchanged” and investors calling it “a non-event.” [7] Obviously, the fines are considered a mere slap on the wrist and simply the cost of doing business. According to transcripts of trader chat room messages, one Barclays trader said, “If you aint [sic] cheating, you aint trying.”

Given such arrogant insouciance, a “Robin Hood” tax on financial transactions is timely indeed. And apparently, it needs to be instituted before the TPP is signed.

Joyce Nelson is an award-winning Canadian freelance writer/researcher working on her sixth book.

Notes:

[1] http://www.thenation.com/blog/207593/bernie-sanders-has-plan-tax-wall-street-and-make-college-free

[2] Ibid.

[3] http://www.nationalnursesunited.org/press/entry/sen.-bernie-sanders-introduces-free-college-bill-powered-by-robin-hood-tax

[4] http:///www.counterpunch.org/2015/02/13/those-crappy-trade-deals/print

[5] Media release from Lori Wallach and Todd Tucker, Public Citizen’s Global Trade Watch, June 13, 2012.

[6] https://thehill.com/policy/finance/242643-large-banks-plead-guilty-to-market-maniuplation

[7] http://nypost.com/2015/05/20/five-banks-in-rate-rigging-cartel-hit-with-criminal-charges

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Joyce Nelson’s sixth book, Beyond Banksters: Resisting the New Feudalism, can be ordered at: http://watershedsentinel.ca/banksters. She can be reached through www.joycenelson.ca.

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