Editor's note: This contribution by the late journalist I.F. Stone first appeared in our January 1975 magazine.
A recent analysis reinforces the case for a financial transaction tax in the United States.
The idea has been around since the 1970s in one form or the other (I have a more than a decade-old poster for the tax up in my office). Now, Jesse Eisinger in a piece for ProPublica and the New York Times strengthens the justification for such a levy.
Eisinger makes a convincing argument that a tax of this sort would not be hard to collect, would calm down the irrational speculation that has harmed all of us, and would help reduce the federal deficit.
"The average American, who has limited exposure to the stock market, has little to fear from the tax and much to gain," Eisinger writes. "And if some of the high-frequency trading flees offshore? Good riddance."
Eisinger's reasoning has been backed up by others. Nobel laureate Joseph Stiglitz has also stated that the tax wouldn't be too difficult to enforce due to the advent of modern technology. Plus, "the financial sector polluted the global economy with toxic assets and now they ought to clean" up, Stiglitz said a few years ago.
Europe is getting its act together. Eleven countries on the continent, including France and Germany, are getting the ball rolling on such a tax. But the Obama Administration has been a major roadblock to anything of that sort happening here.
As Ron Suskind reported in "Confidence Men," his must-read account of economic policymaking under Obama, the President was sabotaged by his own underlings like Lawrence Summers and Tim Geithner.
"A financial transactions tax on banks and financial institutions, to try to tame the trading emphasis that has swept those industries and along the way, raise money: Obama said, in one meeting, 'We are going to do this!'" Suskind wrote. "Summers disagreed; it never materialized."
And Geithner provided a more public face for the same pig-headedness.
"That's not something that we're prepared to support," Geithner responded when then-British Prime Minister Gordon Brown proposed a global transaction fees in 2009. With assistance from the IMF and Canada's conservative government, the Obama Administration shot the idea down.
Geithner was so hell-bent against the tax that he alienated our allies.
In 2011, Geithner "even chastised Europeans for moving towards implementation of such taxes in their own territories, prompting angry words from the Austrian finance minister," writes Sarah Anderson of the Institute for Policy Studies.
Jacob Lew, his incoming replacement as Treasury Secretary, offers scant hope, since he doesn't seem to have a basic understanding of financial markets.
"I don't believe that deregulation was the proximate cause" of the economic crisis, he said during his 2010 Senate confirmation hearing for his position as Office of Management and Budget director.
Progressives in Congress are trying to move forward undeterred. Iowa Senator Tom Harkin and Oregon Congressman Peter DeFazio are reintroducing a bill asking for a tax of 3 cents per $100 of transaction. DeFazio has cited a Joint Tax Committee study that his bill would raise more than $350 billion in revenue over a decade.
But, in spite of the many benefits of his proposal, DeFazio knows that the Obama Administration is on the wrong side.
"That's all they're about," DeFazio told the Washington Post in 2011. "They are going to defend speculators until their dying breath."
The Obama Administration needs to see the light here -- before its Wall Street friends destroy the global economy again.
If you liked this article by Amitabh Pal, the managing editor of the Progressive magazine, please check out his article entitled "John Kerry's Conventional Mindset."
Follow Amitabh Pal @amitpal on Twitter.