Members of the House Populist Caucus, chaired by Representative Bruce Braley (IA-01), held a press conference on Thursday to endorse a bill that would "assess a small fee on Wall Street day traders to pay down the national deficit and invest in America's middle class families."
From a press release Braley's office issued on December 3:
"One of the founding principles of the Populist Caucus is to fight for working families by creating and retaining good paying jobs," Braley said. "For the past eight years, our economic policies have put the interests of Wall Street ahead of the interests of Main Street Americans. The reasons we introduced the Wall Street transaction tax today is because we need to get our economy working again for Middle Class families. That's who we're fighting for every day and that is who our federal government should be fighting for."
"Our nation continues to be crippled by a struggling economy which has resulted in an astronomical unemployment rate of 10.2 percent," [Representative Peter] DeFazio [OR-04] said. "The American taxpayers bailed out Wall Street during a crisis brought on by reckless speculation in the financial markets. This legislation will force Wall Street to do their part and put people displaced by that crisis back to work." [...]
The legislation will assess a small securities fee on the following transactions:
· Stock transactions (tax rate will be 1/4 of 1 percent--0.25%),
· Futures contracts to buy or sell a specified commodity of standardized quality at a certain date in the future, at a market determined price (tax rate will be 0.02%),
· Swaps between two firms on certain benefits of one party's financial instrument for those of the other party's financial instrument (tax rate will be 0.02%)
· Credit default swaps where a contract is swapped through a series of payments in exchange for a payoff if a credit instrument (typically a bond or loan) goes into default (fails to pay) (tax rate will be 0.02%),
· And options, which are contracts between a buyer and a seller that gives the buyer the right, but not the obligation, to buy or to sell a particular asset on or before the option's expiration time, at an agreed price (at the rate of the underlying asset).
To ensure the tax is appropriately targeted to speculators and has no impact on the average investor and pension funds, the tax will be refunded for:
1) tax-favored retirement accounts,
2) education savings accounts,
3) health savings accounts,
4) mutual funds and,
5) the first $100,000 of transactions annually that are not already exempted.
Braley spokeswoman Caitlin Legacki told me that as of Friday morning, the bill has 21 co-sponsors, 14 of whom belong to the Populist Caucus.
The bill has at least one champion in the Senate. HELP Committee Chairman Tom Harkin appeared with Populist Caucus members at yesterday's press conference. I don't know whether any Democrat on the Senate Finance Committee is willing to push for this measure.
I haven't seen any reaction yet from the Obama administration. Supporting this bill should be an easy call, but my hunch is that Treasury Secretary Timothy Geithner and senior presidential adviser Larry Summers will have Wall Street's back on this one. Here's hoping I am wrong about that.
