With President Barack Obama attacking “fat cat bankers on Wall Street,” left-wing non-governmental organizations (NGOs) see a great opportunity to pass a global tax on financial transactions that could generate at least $700 billion a year from the U.S. and other “rich” countries. They are expecting Obama’s support.
The banks are a key target because of the “anger” that already exists against them for their roles in the global financial crisis, says a detailed 13-page memorandum from Max Lawson of the foreign aid group Oxfam.
Calling the global Financial Transactions Tax (FTT) “an idea whose time has come,” Lawson says in his memorandum that “politically the time is now” to pass such a tax. “It will take some great campaigning but I think we can do this,” he says in a message introducing the memo.
Lawson explains, “The global anger against the bankers; the huge pressure on rich country budgets; the need for money in 2010 to rescue the MDGs [Millennium Development Goals] and from failure; to protect poor countries from the economic crisis; and the need to come up with money for climate change to unlock a global deal. All combine to make a very strong political backdrop.”
The MDGs were established by the United Nations to make sure that the U.S. and other Western nations devote 0.7 percent of Gross National Product to official development assistance or foreign aid. As a Senator, Obama had introduced a bill, the Global Poverty Act, to mandate U.S. compliance with the MDGs at an estimated cost of $845 billion.
Lawson, head of development and finance for Oxfam in Britain, has distributed his 13-page memorandum to members of NGOs in the U.S. and other countries. “There is potentially plenty of money here for all of our issues,” he tells them.
The global tax is being called “the Robin Hood tax,” in order to convince people that it is somehow designed to take money away from rich people in order to help the poor. Another variation on this theme is the claim that the tax is aimed at Wall Street to help Main Street.
In reality, such a tax would affect IRAs, Mutual Funds and pensions by taxing the exchange of financial transactions. It would hand over great sums of money to politicians in the name of bashing the big banks but ordinary Americans and their life savings would be hurt.
As outlined by Lawson, however, the idea is to create the appearance of public support for the plan, ultimately enabling G8 leaders meeting in Canada in June to agree to the global tax and then get acceptance from the G20 leaders meeting afterward.
At the same time, the U.S. Congress is moving ahead with the “Let Wall Street Pay for the Restoration of Main Street Act of 2009” (HR 4191), a financial transactions tax introduced by Rep. Peter DeFazio (D-Ore.), a leading member of the Congressional Progressive Caucus.
Lawson’s document cites support for the tax from Democratic House Speaker Nancy Pelosi, who endorsed the DeFazio measure during a December 7 news conference and, according to a CNS News report, announced that the bill would have to be made “global” to keep U.S. investors from taking their business overseas and out of taxable reach.
Senator Tom Harkin (D-Iowa) is introducing a similar bill, which has the backing of the AFL-CIO, in the Senate.
An “Open Letter from Economists in Support of Financial Transaction Taxes” has been released and signed by 200 liberal and left-wing economists.
Lawson also cites support for the tax from billionaires George Soros and Warren Buffet and such media organizations and figures as Le Monde, The Mail, The Guardian and Paul Krugman of the New York Times.
President Obama “supported [the idea] during his campaign,” Lawson says, but the U.S. Treasury Department under Timothy Geithner has been resisting it.
However, Politico reported on December 3 that Pelosi is now pressuring Geithner to accept the global tax proposal. “Geithner was widely seen as opposing such a levy when it was proposed by Gordon Brown, the British prime minister, at a meeting of G-20 finance ministers last month in Scotland,” the publication reported. But after a telephone conversation, “Pelosi told colleagues that the secretary indicated he was more open to some such fee than had been reported,” it added.
Some elements of the Lawson plan that are designed to secure passage of the legislation seem modeled on the 1999 “Battle in Seattle,” when 5,000 activists marched against the idea of global free markets, producing confrontations with police trying to keep order on the occasion of a meeting of the World Trade Organization. Lawson suggests “two or three global events” and “days of action” where “activists climb up banks” in order to pressure officials to adopt the global tax.
Joseph E. Stiglitz, a cabinet member in the Clinton Administration, claimed in his book,Globalization and Its Discontents, that the “protests at meetings of global financial leaders in Seattle, Prague, Washington, and Genoa…” had put pressure on the international community for more global action to solve the world’s problems.
Stiglitz is one of several high-profile figures listed in the Lawson memo as supporting a global financial transactions tax.
In Copenhagen, where governments are now meeting on the so-called “climate change” issue, some of the same leftists have been on display, marching in the streets under the banner of “Climate Justice Action” to demand that the U.S. and other Western nations pay “reparations” and an “ecological debt” to the less developed nations. U.N. reports have put this figure at $24 – $45 trillion.
On the eve of the Copenhagen summit, French President Nicolas Sarkozy joined with Prime Minister Gordon Brown in issuing a statement calling for a global financial transactions tax and other “innovative financing mechanisms” to assist countries fighting climate change.
Other elements of the Lawson plan seem modeled on “anti-poverty” campaigns such as Live Aid and Comic Relief. Live Aid was a rock music concert held on July 13, 1985, in order to raise funds to fight global poverty, while Comic Relief was designed to use comedy and laughter to alert the public to poverty.
In terms of using celebrities and making a big splash in the media, Lawson cites the case of Richard Curtis, a film director and the “creative energy” behind the Make Poverty Historycampaign, which urges people to wear a white band around their wrists as a “common symbol of the global fight to end poverty.”
Lawson says Curtis “is very interested in a short campaign” to press for a Financial Transaction Tax and “is working with colleagues in the advertising industry to work up ideas around a set of creative ideas that could be used by campaigns around the world, based on a Robin Hood Tax. His hope is to produce a set of materials that would be useful to all, and give the issue a huge global profile. He is also likely to use his media contacts around the world to ensure high profile for the fight for the tax.”
The global targets are the G8 and G20 groups of nations because the G20 summit in Pittsburgh in September decided that the G20 would replace the G8 as the leading international body for economic matters. As numerous media organizations have observed, the move signaled a major shift in global politics that has seen the authority and power of the U.S. in global affairs undermined. President Obama went so far at the G20 meeting to agree to a proposal for an International Monetary Fund study of how a global tax could be implemented.
Oxfam, which is spearheading the campaign to get a global tax implemented, is one member of an international coalition of organizations working “to fight poverty and injustice.” ItsAmerican affiliate receives funding from such entities as the Bill & Melinda Gates Foundation and the Rockefeller Foundation.
So-called progressives in the U.S. are now openly pressuring the Obama Administration to go along with the proposal. “We need to make this bill [the DeFazio/Harkin approach] a reality in the United States―and then take it worldwide,” The Progressive magazineproclaims.
Support can also be expected from the New Rules for Global Finance coalition, which runs the gamut from typical liberal-left groups to religious-oriented organizations.
The main problem with the Lawson scenario is that the truth about massive corruption in the foreign aid business is a matter of public record.
The Senate Foreign Relations Committee published a report in 1995 which revealed that the cost of foreign aid provided by the U.S. to the rest of the world since the end of World War II had already reached nearly $2 trillion, with little to show for it in terms of alleviating poverty.
Two excellent books―The Lords of Poverty by Graham Hancock, and The Road to Hellby Michael Maren―exposed massive corruption in the foreign aid business.
Thowing a Participation Fee on the general public for buying & selling stocks IS NOT a way to get back at Wall Street Investment Banks. Tax those banks directly if you want to exact money from them. Why slam the general public with a transaction tax because of what the investment banks did?
It will hurt all investors (big or small).
Small investors (non-traders) may assume that they are not taxed if they have less than $100,000 transaction per year.
Even if they are not taxed directly, they will be paying a bigger spread when they buy or sell stocks.
When the retail traders disappear due to this tax, market makers get a windfall – market makers will pocket the bigger spread between bid and ask. In addition, market makers and broker-dealer banks will very likely get exemption from this tax.
It is a gift to the big banks and market makers, at the expense of everyday investors and traders.
as an avg investor i dont want to pay this tax. this tax is probably the most disgusting idea in a time like this that i have ever seen. what this tax does is take the humble working man and taxes the hell out of their retirement over the next 40 years. oh and by the way those same big banks that you proclaim are the enemy are gonna get their exemptions and trade at will just like the do already in the uk where they have a transaction tax in place already.
ps a simple message to all the glorious politicians out there ” think before you speak” thats all us citizens ask
I’m a farmer. I buy futures to hedge for my crops. If I’m taxed a transaction fee to do my business, that fee is going to be passed down to everyone who buys my crops. Every farmer does this hedging. Your food prices are going to rise to pay for this tax. Everyone who eats will pay the tax, not me. I’m going to pass it right along.
A transaction tax is the most idiotic proposal I’ve ever heard of!!!!!!! I find it rather interesting that the author of this article failed to point out that Geithner came out after his conversation with Pelosi, and continued to stated that he opposes a transaction tax, and that Pelosi was misunderstanding what he meant by implementing fees. Idiot Pelosi thinks it means the trader tax, while Geithner says he favors fee’s on the banks. Geithner also states that a transaction tax would not be fair to retail traders, and will leave them with fewer choices. Not to mention if this tax were applied, Wall Street would get all the exemptions from this, and the tax would only apply to mom and pop retail traders, who had absolutely nothing to do with the financial crisis.
Gee, it’s such a shock that the liberal, transaction tax lover Kincaid failed to point any of this out!!!!
A very dangerous idea. It is not a ‘Robin Hood tax’ because it will punish main street due to wider bid-ask spreads, greater volatility and collapsing volumes that will force brokers and exchanges to increase fees. Please consider Sweden’s experience with financial transaction taxes between 1984-91, it was a disaster.
However, left wing NGOs might alternatively like to make a contribution to the Robin Hood Foundation(http://www.robinhood.org/home.aspx), a group that tackles poverty, ironically founded by legendary speculator/trader Paul Tudor Jones.