Where the money isAugust 3rd, 2011 | by Heather Coleman
It looks like the big banks got away scott free in the debt bill signed by President Obama last night while the poor and middle class are likely to pay the price. We won’t know how all of the numbers shake out until the fall, but there will be added pressure for greater cuts to international programs that are key to US standing globally and to our national security, not to mention the livelihoods of millions of poor people around the world.
In June, the European Commission proposed an EU-wide tax on financial transactions (such as large stock or options trading) to fund its next long-term budget. Details have not yet been released, but estimates have found that a small tax could raise €30 billion a year by 2020. French President Nicolas Sarkozy has expressed support for a Financial Transaction Tax (FTT) and the French Parliament voted by a big majority to support an EU-wide financial tax in June.
This is exactly the type of revenue raising proposal that makes sense in the US right now. As noted in Reuters Money over the weekend, most of the major US banks are pulling in profits while they still owe taxpayers $1.5 trillion of the $4.8 trillion in federal bailout loans are still outstanding. And prominent US pollster, Stanley Greenberg, pointed out in a Sunday Times op-ed that most Americans would support at least a modest tax on financial speculation and other types of large transactions that benefit institutions over people.
The debt ceiling compromise, and the politics surrounding it, left revenue raising mechanisms, whether taxes or other measures, off the table. But there’s an opportunity for the administration and Members of Congress to incorporate a Financial Transactions Tax into a longer-term strategy to reduce the deficit and save critical government programs. An important step in gaining some traction on a FTT would be a signal of support from the administration to EU countries in the lead up to the G20 in November.