News & Events

Union Pressure, OWS Protests Tear Down a Barrier to Taxing Speculators

Does protesting and pressuring powerful players in political and economic life matter?

Can the White House and Congress really be moved on questions so central as taxing financial speculation?


And here’s the evidence of how of it works.

For months, the AFL-CIO has been been pressuring the Obama administration to ease off rigid opposition to international efforts to tax financial speculators. And that pressure has been highlighted on Capitol Hill and on the streets by an allied union, National Nurses United.

The White House stance has been one of the chief barriers to the efforts of French President Nicolas Sarkozy and German Chancellor Angela Merkel to reach an agreement within the Group of 20 economic superpowers to develop a small financial transactions tax (FTT) that would target speculators.

A tiny tax of this kind on stock, bond and commodity transactions would not be a problem for small investors, who would barely note its presence — and might even be exempt from it. But it could reap hundreds of billions from the high-stakes speculators who trade financial instruments at lighting speed and in immense numbers.

AFL-CIO President Richard Trumka has met personally with key administration aides to urge the US Treasury to, at the very least, get out of the way of efforts to develop a financial transactions tax internationally and, potentially, in the United States.

At the same time, National Nurses United has worked closely with the 99 Percenters of the “Occupy Wall Street” movement to ramp up a major “Tax Wall Street” campaign. On Thursday, thousands of nurses and their allies rallied outside the Treasury Department headquarters in Washington on behalf of the project.

Also, on Thursday, NNU executive director Rose Ann DeMoro was in Cannes with international nurses union leaders to up the ante going into this week’s G-20 meetings. Early Thursday, she was saying: “It is long past time for Secretary Geithner and President Obama to get on board with other world leaders in supporting this common-sense approach to raise badly needed revenues to help fund the critical programs we need to revive the US and other global economies.”

Then something significant, potentially remarkable, happened.

As the nurses were preparing to rally, in Cannes and Washington, a Reuters report announced that: “European leaders could make progress in their drive for a financial transaction tax at a Group of 20 summit this week after French President Nicolas Sarkozy indicated Washington may prove less of a barrier than in the past.”

An EU source told Reuters the United States now seemed “less problematic” on the issue.

A source in an international development organization told Reuters that, while the United States still opposed the idea in principle, it would “not block others from going ahead with new taxes.”

“I think we have a common analysis on how to get the world of finance to contribute to resolving today’s crisis,” Sarkozy told reporters following a meeting with President Barack Obama.

The White House effectively confirmed Sarkozy’s statement, with a signal from Mike Froman, the White House’s deputy national security adviser for international economic affairs.

“The president made clear that he shares the objectives that Chancellor Merkel and President Sarkozy have in ensuring that the financial sector contributes an appropriate share to the resolution of crises,” said Froman.

While the Obama administration prefers a different approach—imposing a financial crisis responsibility fee on large financial institutions—Froman said: “I think there is broad consensus between the Europeans that the president met with this morning and ourselves about the ability of each to pursue this in their own way, whatever way they see to be most effective.”

Essentially, according to the Wall Street Journal’s analysis, the United States has told Sarkozy, Merkel and other financial transaction tax backers “go for it.”

That’s a go-ahead for G-20 leaders to do something that the United States had been blocking. There are still barriers, potentially from Britain and Sweden. But this is real progress.

It does not necessarily mean that a global model for an FTT will be agreed to.

And it certainly does not mean that the United States will move in the right direction at home.

But it is notable that Senator Tom Harkin, D-Iowa, and Congressman Peter DeFazio, D-Oregon, this week proposed that the United States implement a small financial transactions tax.

What Harkin and DeFazio are proposing is modest, and its being pushed at this point to put the broad idea on the agenda of the Congressional supercommittee on deficit reduction.

National Nurses United and its allies (including groups such as Progressive Democrats of America) are looking for more, arguing: “The FTT could raise up to $350 billion per year to provide living wage jobs, guaranteed healthcare, a secure retirement for all and fund and protect public education.”

Moving $350 billion a year from Wall Street speculation to meeting the needs of the people is a tall order.

But with the Catholic Church and responsible business leaders such as Microsoft founder Bill Gates stepping up to say some sort of financial transactions tax makes sense, there’s momentum. And with the United States easing its position on the development of global models for taxing transactions, the barriers are beginning to fall.

Protests matter.

Pressure matters.

The nurses aren’t just making noise. It looks like they’re changing the debate, altering the policies of the most powerful players in Washington—and perhaps the world.

From The Nation, John Nichols