The Politics of Poverty

Ideas and analysis from Oxfam America's policy experts

Obama should grab a pitchfork and join the mob

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Obama should join the movement calling on the banks and Wall Street to contribute their share to economic recovery.

President Obama has found a new voice in recent weeks around the economy and taxes. Presumably, he’s made a new political calculation that negotiation and compromise–speaking softly–won’t deliver results. So, he’s come out with much stronger rhetoric, saying “tax the rich” and pass the jobs bill “right away.”

But, the Obama administration has always been a bit wobbly when it comes to delivering justice to the banks and financial industry. You will recall taxpayers had to bail them out the tune of $550 billion, give or take. And, you will recall, it was irresponsible risk-taking and unregulated financial confabulation by the banks and finance industry that were a central cause of the financial and economic crisis that we are still suffering under.

In his financial reform proposal, President Obama included a modest fee on “systemically important” financial entities to help cover the potential costs of future bailouts. It wasn’t very big–only about $19b, which is chicken feed in the bank bailout business. But even that little thing was stripped out of the final Dodd-Frank financial reform bill.

So today, in the midst of a slow-moving crisis with a sickly economy, high unemployment, and home foreclosures, banks and investment funds are back to their old ways–issuing massive bonuses and flogging “innovative” financial products. The banks and Wall Street are contributing nothing more to the public or to the taxpayers: “thanks for the bailout, good luck balancing the budget”.

The Robin Hood Tax can raise billions to reduce poverty around the world.  Photo by Ami Vitale/Oxfam.
The Robin Hood Tax can raise billions to reduce poverty around the world. Photo by Ami Vitale/Oxfam.

For months, a movement has been growing to call on the financial industry to contribute more. Variously called a Robin Hood Tax, or a financial transactions tax, it started as an idea pushed by a few activists and economist and has become a serious policy proposal. On Wednesday, European Commission President Jose Manuel Barroso proposed a new Europe-wide financial transactions tax to help cover fiscal deficits and ensure support for core needs, saying “it’s a question of fairness, it is time for the financial sector to make a contribution back to society.”

So what has President Obama had to say on this? Well, nothing really. There’s a hint that he actually likes the idea–or so it was reported in Ron Susskind’s new book on the inside of Obama administration in the financial crisis. But, all the president’s men hate the idea and have been trying to suppress it. Economic advisor Lawrence Summers is said to have quashed it within the Administration. And Treasury Secretary Tim Geithner has taken it upon himself to fly to Europe and rail against it to European finance ministers. The latter was viewed as a bit impolite.

Now there’s a sit-in protest, occupying Wall Street. The Tea Party and MoveOn are united by thinking taxpayers have been too generous with the banks and Wall Street. Why doesn’t President Obama grab a pitchfork and get in front of this mob?

See also: C’est raisonnable.

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