Read My Lips: Yes, New Taxes

The EU has passed a financial transaction tax. What’s America waiting for?

Leo Gerard, United Steelworkers President

On April 17, 2012, Tax Day, union members marched through Times Square protesting low tax rates on large corporations. (Michael Fleshman / Flickr / Creative Commons)

Last week, 11 Euro­pean nations forged ahead to cre­ate a new tax while Amer­i­can Repub­li­cans walked back­ward into a no-new-tax trap.

Yes, new taxes are necessary. Especially those focused on the speculators who caused the crash.

On Jan. 22, the Euro­pean Union gave 11 mem­ber coun­triesinclud­ing eco­nom­ic giants Ger­many and Franceper­mis­sion to insti­tute a finan­cial trans­ac­tion tax, a tiny fee charged on trades of stocks, bonds and oth­er finan­cial instruments.

On the same day, U.S. House Speak­er John Boehn­er announced that he’d giv­en failed Repub­li­can vice pres­i­den­tial can­di­date Paul Ryan the task of prepar­ing a bud­get that would end the fed­er­al deficit with­in a decadewith­out new tax­es.

That stuck Ryan with grim choic­es. He can break America’s decades-old pledge of decen­cy to the aged and infirm through Med­ic­aid, Medicare and Social Secu­ri­ty. Or he can break the Repub­li­can pledge of no new tax­es. Repub­li­cans put them­selves in this posi­tion because they don’t under­stand Amer­i­canshard-work­ing peo­ple the GOP stan­dard-bear­ers called tak­ers.” Repub­li­cans do this to them­selves because they don’t under­stand how much Amer­i­cans rely on and plan their lives around the promise of Medicare and Social Secu­ri­ty. They do this because they don’t have a clue that Amer­i­cans would glad­ly impose a finan­cial trans­ac­tion tax on the Wall Street spec­u­la­tors who caused the Great Reces­sion, which bloat­ed the deficit.

Two Democ­rats have for years pro­posed a finan­cial trans­ac­tion tax for the Unit­ed States. Iowa Sen. Tom Harkin and Ore­gon Rep. Peter DeFazio would charge 3 cents on every $100 worth of stocks, bonds, deriv­a­tives and oth­er Wall Street trans­ac­tions. That would raise $35 bil­lion a year. The 11 Euro­pean coun­tries plan a high­er tax10 cents on every $100. If the Unit­ed States insti­tut­ed a finan­cial trans­ac­tions tax match­ing the Euro­pean rate, it would raise more than $100 bil­lion a year, which would go a long way toward end­ing the deficit.

The Wall Street cri­sis caused the large fed­er­al deficits over the past four years, Nobel Prize win­ning econ­o­mist Paul Krug­man has repeat­ed­ly point­ed out. Dur­ing the Great Reces­sion, high unem­ploy­ment reduced the tax dol­lars the gov­ern­ment received while at the same time the gov­ern­ment paid out more for relief pro­grams like unem­ploy­ment benefits.

Amer­i­can tax­pay­ers, who suf­fered job loss and fore­clo­sure as a result of Wall Street reck­less­ness, would love to charge finan­cial spec­u­la­tors 3 cents on $100 in trades. They’d be hap­py to impose the tax that would chill mar­ket-endan­ger­ing finan­cial spec­u­la­tion and high-speed trad­ing. They’re all for restor­ing a tax that the Unit­ed States charged for 50 years dur­ing its great­est eco­nom­ic expan­sion and that 30 nations still charge in one form or anoth­er today.

Repub­li­cans and busi­ness lob­by­ists like the U.S. Cham­ber of Com­merce wail that no tax should be exact­ed from the frag­ile mar­ket,” but they’re eager to impose dev­as­tat­ing cuts to the frag­ile house­hold finances of elder­ly and infirm Americans.

Ryan’s last bud­get took near­ly 30 years to end the deficit. That plan would have slashed and burned pro­grams for the mid­dle class. It pro­posed cut­ting $800 bil­lion from Med­ic­aid and turn­ing the pro­gram over to the states. It called for cut­ting $716 bil­lion from Medicare and voucher­iz­ing it, a change that would cost each senior cit­i­zen thou­sands of dol­lars each year. It would have cut $130 bil­lion from food stamps. Its cuts to Pell Grants would have denied tuition help to 1 mil­lion col­lege students.

And the Ryan plan includ­ed big tax breaks for the rich.

This time, the wealthy won’t get those dis­counts. The Bush tax breaks for the rich end­ed Jan­u­ary 1, and Ryan said he would not restore those low­er rates in his new bud­get plan. The $630 bil­lion that will come from reestab­lish­ing Clin­ton era tax rates on the rich as well as the bil­lions in ben­e­fits from the improv­ing econ­o­my will give Ryan a lit­tle wig­gle room he didn’t have last time.

But end­ing the bud­get deficit with­in a decade with­out rais­ing tax­es would cost the mid­dle class dear­ly. Repub­li­can Rep. Cyn­thia Lum­mis of Wyoming acknowl­edged that, con­tend­ing Amer­i­cans want to sac­ri­fice. She said:

The Amer­i­can peo­ple are ready to sac­ri­fice to save our coun­try, and it’s time for us to let the Amer­i­can peo­ple sac­ri­fice to save this coun­try for their chil­dren and grand­chil­dren. I haven’t seen any effort to do that in Con­gress until this 10-year pro­pos­al came up.

She added that she’s rip-roar­ing ready to sac­ri­fice her­self. Of course, sac­ri­fice” for her is cush­ioned by big piles of green­backs since she’s a 1 per­center, a mul­ti-mil­lion­aire like Ryan. Just the $174,000 a year they receive as pay for their jobs in the U.S. House pro­vides a soft­er cush­ion than the $50,000 a year earned by the aver­age guy whose throat those Repub­li­cans want to shove sac­ri­fice down.

Lum­mis and Ryan don’t live like aver­age Amer­i­cans. They don’t under­stand aver­age Amer­i­cans. And, sim­i­lar­ly, Lum­mis, Ryan and many Repub­li­can politi­cians mis­con­strue what aver­age Amer­i­cans did to George H.W. Bush. He was the Repub­li­can who promised Read my lips: No new tax­es,” in his nom­i­na­tion accep­tance speech, who won the pres­i­den­cy on that pledge and who then turned around and raised tax­es.

Bush went down to defeat when he ran for re-elec­tion. But it wasn’t because he raised tax­es to help close a bud­get deficit. It was because aver­age Amer­i­cans couldn’t trust him. The tax­es weren’t the prob­lem. It was the bro­ken pledge.

It was a promise he nev­er should have made. Just as Repub­li­cans should not be mak­ing that vow again. Espe­cial­ly if the promise means that to end the deficit in a decade they’ll break America’s solemn pledges to its elder­ly, its infirm, its vet­er­ans and its impov­er­ished children.

To equi­tably reduce the deficit in a way that main­tains good faith with the Amer­i­can peo­ple requires tax increas­es. And match­ing the Euro­pean finan­cial trans­ac­tion tax is a good place to start. Yes, new tax­es are nec­es­sary. Espe­cial­ly those focused on the spec­u­la­tors who caused the crash.

Full dis­clo­sure: The Unit­ed Steel­work­ers union is a spon­sor of In These Times.

Leo Ger­ard is inter­na­tion­al pres­i­dent of the Unit­ed Steel­work­ers Union, part of the AFL-CIO. The son of a union min­er; Ger­ard start­ed work­ing at a nick­el smelter in Sud­bury, Ontario, at age 18, and rose through the union’s ranks to be appoint­ed the sev­enth inter­na­tion­al pres­i­dent Feb. 28, 2001. For more infor­ma­tion about Ger­ard, vis­it usw​.org.
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