Progressive Caucus to the GOP: Potential Extension Of Tax Cuts Leaves Out Middle Class, Hurts Climate

By Congressional Progressive Caucus

  WASHINGTON, DC – Representatives Raúl Grijalva (D-AZ) and Keith Ellison (D-MN), co-chairs of the Congressional Progressive Caucus (CPC), released the following statement in response to a reported agreement in Congress on extending certain tax breaks.

The provisions that are included in the deal, such as permanent extension of tax breaks for corporate research and continued fossil fuel subsidies, will add nearly $450 billion to our budget deficit while providing little relief to the middle class and phasing out renewable energy credits.

“The tax extension package will once again be a boon for corporate profits while largely leaving out middle-class and low-income families who are struggling just to get by. If we can find hundreds of billions of taxpayer dollars to make corporate tax breaks permanent, we should be able to help those struggling to find work. We should be making permanent those tax breaks that help working families without adding restrictions that exclude children in need.  This deal is a permanent step backwards for those who think we have a system that is rigged in favor of the wealthy.”

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Elizabeth Warren: It’s Time to Work on America’s Agenda

(J. David Ake/AP)

By Elizabeth Warren

Op-Ed, Washington Post

Elizabeth Warren, a Democrat, represents Massachusetts in the Senate.

Nov 7, 2014 - There have been terrible, horrible, no good, very bad Election Days for Democrats before — and Republicans have had a few of those, too. Such days are always followed by plenty of pronouncements about what just changed and what’s going to be different going forward.

But for all the talk of change in Washington and in states where one party is taking over from another, one thing has not changed: The stock market and gross domestic product keep going up, while families are getting squeezed hard by an economy that isn’t working for them.

The solution to this isn’t a basket of quickly passed laws designed to prove Congress can do something — anything. The solution isn’t for the president to cut deals — any deals — just to show he can do business. The solution requires an honest recognition of the kind of changes needed if families are going to get a shot at building a secure future.

It’s not about big government or small government. It’s not the size of government that worries people; rather it’s deep-down concern over who government works for. People are ready to work, ready to do their part, ready to fight for their futures and their kids’ futures, but they see a government that bows and scrapes for big corporations, big banks, big oil companies and big political donors — and they know this government does not work for them.

The American people want a fighting chance to build better lives for their families. They want a government that will stand up to the big banks when they break the law. A government that helps out students who are getting crushed by debt. A government that will protect and expand Social Security for our seniors and raise the minimum wage.

Americans understand that building a prosperous future isn’t free. They want us to invest carefully and prudently, sharply aware that Congress spends the people’s money. They want us to make investments that will pay off in their lives, investments in the roads and power grids that make it easier for businesses to create good jobs here in America, investments in medical and scientific research that spur new discoveries and economic growth, and investments in educating our children so they can build a future for themselves and their children.

Before leaders in Congress and the president get caught up in proving they can pass some new laws, everyone should take a skeptical look at whom those new laws will serve. At this very minute, lobbyists and lawyers are lining up by the thousands to push for new laws — laws that will help their rich and powerful clients get richer and more powerful. Hoping to catch a wave of dealmaking, these lobbyists and lawyers — and their well-heeled clients — are looking for the chance to rig the game just a little more.

But the lobbyists’ agenda is not America’s agenda. Americans are deeply suspicious of trade deals negotiated in secret, with chief executives invited into the room while the workers whose jobs are on the line are locked outside. They have been burned enough times on tax deals that carefully protect the tender fannies of billionaires and big oil and other big political donors, while working families just get hammered. They are appalled by Wall Street banks that got taxpayer bailouts and now whine that the laws are too tough, even as they rake in billions in profits. If cutting deals means helping big corporations, Wall Street banks and the already-powerful, that isn’t a victory for the American people — it’s just another round of the same old rigged game.

Yes, we need action. But action must be focused in the right place: on ending tax laws riddled with loopholes that favor giant corporations, on breaking up the financial institutions that continue to threaten our economy, and on giving people struggling with high-interest student loans the same chance to refinance their debt that every Wall Street corporation enjoys. There’s no shortage of work that Congress can do, but the agenda shouldn’t be drawn up by a bunch of corporate lobbyists and lawyers.

Change is hard, especially when the playing field is already tilted so far in favor of those with money and influence. But this government belongs to the American people, and it’s time to work on America’s agenda. America is ready — and Congress should be ready, too.

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Does America Need a Robin Hood Tax?

A tiny fee charged to the biggest banks could generate hundreds of billions of dollars every year for social services, but what effect would it have on Wall Street?

By Kyle Chayka

Progressive America Rising via Pacific Standard

In a video released last month by an organization called The Robin Hood Tax, an increasingly frantic U.K. prime Mmnister (played by British actor Bill Nighy) is forced to defend his decision made 10 years ago back in 2014 not to pass a tax on banking transactions. While Nighy hems and haws, a trio of polished European Union leaders extoll the tax. They say that the revenue, drawn largely from investment bankers, has “restored health services” and “helped fight extreme poverty” in the wake of the global financial crisis.

The video, which has over 250,000 views, is clearly satire, but it comes at the forefront of a burgeoning political movement to do a little more to curtail the excesses that caused the 2008 crisis. The Robin Hood Tax also hosts an international petition with over 650,000 signatures that proposes levying a tax every time a bank trades in commodities like stocks, bonds, foreign currency, or derivatives. The fee would be small—just 0.03 or 0.05 percent of each transaction—but enough to raise $416 billion globally, the organization suggests.

That money would go toward solving basic social issues like public education, affordable housing, and public services—in other words, taking from the rich, as epitomized in the kind of hedge-fund gamblers depicted in Wolf of Wall Street, and giving to the poor, just like the initiative’s namesake.

By trading in risky commodities, the banks lost everyone a lot of money, so why not punish them for it by targeting the very transactions that caused the problem in the first place?

A Robin Hood-style tax, also known as a financial transaction tax, is on track to be finalized by a coalition of 11 European Union governments before May of this year, including Germany and France, where the tax has 82 and 72 percent approval respectively. German Chancellor Angela Merkel is pushing for progress on the tax before the May 2014 E.U. parliamentary elections; European lawmakers are actively pushing their United States counterparts to join the effort.

The idea of a financial transaction tax has a certain visceral appeal that the Robin Hood rhetoric reinforces: By trading in risky commodities, the banks lost everyone a lot of money, so why not punish them for it by targeting the very transactions that caused the problem in the first place? Yet it’s important to weigh the impact the proposed tax would have on Wall Street and Main Street alike.

One benefit of the tax is that it’s designed to make large banks bear the burden (as opposed to consumers or small business owners). Spot currency transactions—tourists switching from U.S. Dollars to Euros, for example—won’t be counted under the tax, nor will transactions with governmental banks, trades in physical commodities, and transactions involving private households, explains a briefing on the bill.

Yet critics fear that any restriction on the flow of investment capital could damage the economy for everyone, not just redistribute some of the wealth away from banks and bankers.

A report from London Economics points out that many households have savings invested in financial instruments that would be impacted by the tax. “In Italy, there is a high level of direct investment in financial markets, with 40 percent of household savings being held directly in the form of equity or debt,” the report notes, with 23 percent of household savings in Spain. The financial transaction tax would quickly make these investments less valuable by slowing down trading and, theoretically, growth.

Another fear is that taxing trading transactions in the European Union, or in the U.S. or U.K. where such a law is less imminent, will cause capital flight from the region as investors look to funnel their money through countries that don’t tax. A recent report by the U.S.-based Financial Economists Roundtable argues that the tax wouldn’t make as much money as has been suggested, since it would provide a disincentive for future business. “Volumes—and thus tax revenues—would shrink as trading dropped or moved to other locations or to lower-taxed vehicles,” the report reads. “A transaction tax imposed at any economically meaningful rate by only some countries would cause many transactions to be shifted to other countries.” What’s currently happening with corporate profits being shuttled through Ireland and the Caribbean, losing billions of dollars in tax revenue, could also occur with investment capital.

The Financial Economists Roundtable report cautions against a kind of cascade, where taxes on transactions would lower financial liquidity, meaning “less capital per worker in the long run and thus lower wages throughout the economy.” Though likely over-exaggerated in the report, the threat of capital flight, which would lead to more difficulty securing loans and start-up funding, is real. But there’s another way to structure a financial transactions tax so it’s even more tightly focused.

IN SEPTEMBER 2013, ITALY became the first country to pass a tax on high-frequency trading, the technology that hedge funds often use to buy and sell financial commodities in fractions of seconds. The tax is tiny at 0.02 percent, and it’s only levied on trades occurring every 0.5 seconds or faster (the Robin Hood tax plan includes a high-frequency tax along with wider-reaching measures).

The high-frequency trading tax is meant as a way for banks to pay for the damage they’ve caused to the economy, but it’s also meant to make trading more efficient rather than less. Driven by computational algorithms rather than human beings, high-frequency trading is less about allocating capital to the businesses that can use it best and more about gaining a competitive edge over other funds. The algorithms that control trading likely aren’t even completing trades, as Felix Salmon points out—they’re putting out buy or sell orders then rescinding them immediately in order to confuse the other algorithms they’re competing against. They might as well be called “high-frequency spambots,” Salmon writes.

Democratic Senator Tom Harkin and Representative Peter DeFazio have repeatedly introduced a U.S. high-frequency trading tax, most recently around a year ago. They propose a 0.03 percent tax on trades that excludes initial public offerings and bonds in order to dampen the tax’s impact on capital raising, which they say will amount to $352 billion in revenue over 10 years. The bill has repeatedly failed, and no plans have been announced to bring it back (Harkin declined to comment for this article).

We’ve already come to the point that stock exchanges are building laser networks to shave extra microseconds off their high-frequency trading. Though our country might benefit from seeing how the European Union’s full financial transaction tax plays out, perhaps it’s time for a little bit of Robin Hood to curtail the worst of the excesses that aren’t benefiting anyone but the banks.

Kyle Chayka is a freelance technology and culture writer living in Brooklyn. Follow him on Twitter @chaykak.

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Majority in the US: Redistribute Wealth, Enact 'Robin Hood Tax'

New Gallup poll finds strong support for ending inequality plaguing the nation

By Andrea Germanos

Progressive America Rising via Common Dreams

April 18, 2013 - A majority of people in the U.S. want more equal wealth distribution and support a "Robin Hood tax" on the rich to achieve that, according to results from a Gallup poll released Wednesday, evidence that the economic policies that concentrate wealth and fuel inequality are out of line with what most people want.

Only 33% of respondents said that the current distribution of wealth in the U.S. is fair, while 59% said it should be more evenly distributed.

The poll results reflect a longstanding sentiment. Wanting more equal wealth distribution has consistently been the position of the majority of Gallup poll respondents since it started asking the question in 1984. At its lowest point in 2000, support for more wealth equality was still the majority opinion at 56%, and was at its highest level in April 2008 at 68%.

Further, a slight majority of respondents in the new poll, 52%, said that more equal wealth distribution should be achieved by a "Robin Hood tax"—heavy taxes on the rich.  Support for such taxes showed clear partisan differences, with 75% of Democrats in support compared to only 26% of Republicans.

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Progressive 'Back to Work' Budget Wins Praise for Anti-Austerity Approach

'A reminder that we don’t need to cut teachers and school lunches when we can eliminate wasteful giveaways to fossil fuel corporations.'  Watch Rep. Keith Ellison introduce the budget here:

By Jon Queally
Progressive America Rising via CommonDreams.org

March 14, 2013 - In the midst of ongoing hysteria about a 'non-existent deficit crisis' in Washington, the Congressional Progressive Caucus on Wednesday unveiled an alternative approach to destructive austerity economics by releasing their 'Back to Work Budget' plan for 2014.

Pushing back specifically on the dominant talking point of inside-the-Beltway elites, the budget challenges the idea that cutting programs, reducing corporate tax rates, and slashing investments is a pathway to economic prosperity. Its proponents argue the US does not have "a deficit crisis"—as those pushing for steep cuts suggest—but rather, "a jobs crisis."

Presented by CPC co-chairs Reps. Raúl M. Grijalva and Keith Ellison and backed by members of the caucus' Budget Task force—Reps. Jim McDermott, Jan Schakowsky, Barbara Lee and Mark Pocan—the plan describes how smart investments, not deep cuts to key programs, would create almost 7 million jobs over the first year of its implementation.

“Americans face a choice,” Grijalva and Ellison said. “We can either cut Medicare benefits to pay for more tax breaks for millionaires and billionaires, or we can close outdated tax loopholes and invest in jobs. We choose investment.”

They continue:

    The Back to Work Budget invests in America’s future because the best way to reduce our long-term deficit is to put America back to work. In the first year alone, we create nearly 7 million American jobs and increase GDP by 5.7%. We reduce unemployment to near 5% in three years with a jobs plan that includes repairing our nation’s roads and bridges, and putting the teachers, cops and firefighters who have borne the brunt of our economic downturn back to work. We reduce the deficit by $4.4 trillion by closing tax loopholes and asking the wealthy to pay a fair share. We repeal the arbitrary sequester and the Budget Control Act that are damaging the economy, and strengthen Medicare and Medicaid, which provide high quality, low-cost medical coverage to millions of Americans when they need it most. This is what the country voted for in November. It’s time we side with America’s middle class and invest in their future.

Received as a breath of fresh air of economic sanity, the plan was praised by a variety of individuals and groups.

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Jobs Legislation for Our Time

The 21st Century Full Employment and Training Act

Rep Keith Ellison, John Nichols and Rep. John Conyers

By Bill Barclay
Progressive America Rising via DSA's New Ground

In May 2010, Rep John Conyers introduced a bill entitled "The 21st Century Full Employment and Training Act." The bill was little noticed at the time but, today, after another 7 months of dismal jobs reports -- we have actually lost ground during 2010, creating fewer jobs than the growth of the labor force -- there is renewed interest in this legislation by a range of progressive groups.

The Democratic Socialists of America has made mobilization around the Act a national priority; Progressive Democrats of America is developing a similar effort, as are both the Committees of Correspondence for Democracy and Socialism and the National Jobs for All Coalition . What follows is a summary of the major elements of the Act and why it is one that anyone concerned about the economy should support.

The 21st Century Full Employment and Training Act includes (i) funding for jobs; (ii) allocation of monies raised by the funding mechanism; (iii) job creation targets (who and what types of jobs); (iv) mechanisms for implementing the Act; and (v) a definition of the economic situations under which the Act would come into effect. I will take these topics one at a time. I will also briefly suggest what a political mobilization effort around the Act could look like.

Funding the 21st Century Jobs Program

Unlike many job creation proposals, the act is deficit neutral: It raises the money to pay for the jobs to be created. Funding for the Act is provided by a tax on the trading of financial assets (FTT). This levy is on trading of stocks, bonds (debt) and currencies -- both the actual financial asset and any derivative product based on the asset, e.g., futures or options, which provides a claim to the returns to holding the actual stock, bond or currency.

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Five Reasons the World Is Catching on to the Financial Transaction Tax

SOURCE: AP/ Yves Logghe

Progressive America Rising via Center for American Progress

Campaigners and European trade unions dress as Robin Hood while calling on European Union leaders to go ahead with a financial transaction tax to mobilize money to help poor people hit by the economic crisis, in front of the European Council building in Brussels on May 23, 2012.

By Adam Hersh and Jennifer Erickson

Feb 25, 2013 - It has been more than 70 years since John Maynard Keynes wrote about the value of a financial transaction tax in “mitigating the predominance of speculation over enterprise in the United States.”

A financial transaction tax works by levying a miniscule fee on the estimated $2.9 trillion of daily financial activity through the trading of stocks, bonds, and derivatives in U.S. financial markets, based on our analysis. The tiny tax makes some of the most speculative unproductive trading unprofitable, thus steadying markets and promoting real investment while raising much-needed revenues. Though many countries around the world already have a financial transaction tax in place, the United States does not yet levy such a fee on trading.

While the idea of a modest financial transaction tax—or FTT, as it is often known—has been around for a long time, with budget balances and economic growth strained in the aftermath of the Great Recession policymakers around the world are taking a new look at the tax.

Below are five reasons why the world is catching on to the financial transaction tax as a smart policy tool.

A financial transaction tax would bring in much-needed revenue

The U.S. government is currently operating at its lowest level of revenues in more than 60 years. A 2010 report from the International Monetary Fund identifies the financial sector of the economy—particularly in the United States—as substantially undertaxed.

Even a tiny financial transaction tax would raise tens of billions of dollars in much-needed revenue. A tax applied at a very low rate—for example, a 0.117 percent tax on stocks and stock-options trading, a 0.002 percent tax for bonds, and a 0.005 percent tax for futures, swaps, and other derivatives trading—would raise an estimated $50 billion a year, according to our calculations. To put that amount into perspective, $50 billion in essence pays for all of America’s veterans health services, which ran to $50.6 billion in 2012. Historical evidence and economic theory show that financial transaction taxes have the potential to raise substantial revenues without impeding the function of capital markets. By keeping constant the relative transaction costs of trading in different markets, a financial transaction tax can raise revenues without distorting market behavior.

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