WILLIAM COHAN: Obama should ‘stay angry at Wall Street’.
So a recent poll found that Americans are divided on the question, “should the US raise the debt ceiling”?
To which the only reasonable response is, so?
We’ve become poll obsessed in America. Polls are used as stand ins for “the will of the people,” and since polls are cheap and easy to do these days (although not in fact easy or cheap to do well), everybody seemingly polls on everything. Then, the results are held up to mean something about what American democracy ought to do, etc.
There are a lot of rants I could offer at the stupidity of this thoughtless poll-mongering, but I want to focus on one: the answer to the question, so?
It turns out that people answer questions pollsters ask even when they don’t know very much—if anything at all—about the issue being addressed. People know they’re supposed to know something about an issue, and if they are at all attentive to political and social life (something you cannot! assume), they feel social pressure to offer an answer. So they do. Even if they don’t know what they’re really opining about.
So let me ask a rhetorical question: how many people do you know (although, admittedly, tumblr might be a bad forum to ask this question) who can define what the debt ceiling is? Can describe why it matters? Can assess what the implications are for failing to raise it?
Unless you can answer these three questions, then a statement of preference in favor or in opposition to raising the debt ceiling is basically meaningless. Accordingly, the notion that public opinion on this matter should be a driver of US economic policy is silly.
More generally, the fact that our democracy seems to increasingly be driven by immediate responses to questions asked of people who actually know almost nothing about the issues at hand has become a curse on the American polity.
I’ll just put this here. I’m quite aware of what Paul thinks about capital punishment and foreign conflicts, but maybe some readers aren’t.
The reason I gave some context to Paul’s stance on abortion is because telling people what they want to hear is a special kind of hypocrisy — and also because it’s unacceptable for an elected official to oppose a woman’s right to choose and for a man to tell a woman what to do with her body. This is because of one’s inherent bodily autonomy.
Coincidentally, Paul’s rationale for opposing abortion rights is actually quite consistent with his stated positions on capital punishment and foreign conflict, which is what made it worth posting more than the usual assault from the right on women’s rights, which are spectacularly inconsistent. I’m assuming he didn’t scold members of the anti-choice crowd for being warmongers, though, because really, why would he?
Sandy Falwell, who has worked in a neonatal intensive care unit for some 20 years, could tell plenty of stories about the impact of the Great Recession on the lives of her patients. One of the most painful: After a woman gave birth to a 2-pound baby, she told Falwell that she blamed herself for her baby’s premature birth. During her pregnancy she had been unable to afford insulin treatments for her diabetes—in part because she was taking care of her elderly parents.
Falwell is a member of National Nurses United, a union whose members come face-to-face with the fallout of the financial crisis every day. On Tuesday, they rallied on Wall Street with the message that “America has the wealth to end the despair and deprivation.”
Rose Ann DeMoro, the union’s executive director, explained: “There’s a financial transaction fee that we’re going to have Wall Street pay—they’ve paid it here in the past—it’s very American. These yo-yos who buy and sell and buy and sell our country should have to pay a tax on that.”
Such taxes place a small fee on each trade of stocks, derivatives, foreign exchange, and other financial instruments, with the goal of raising massive revenues for public needs while also discouraging reckless speculation.
The United States had a transactions tax from 1914 to 1966, which levied a 0.20 percent tax on all sales or transfers of stock. In 1932, Congress more than doubled the tax to help financial recovery and job creation during the Great Depression.
The push for a financial transactions tax gained traction in late 2009/ early 2010. We need to start talking about it again.
To learn more about a financial transactions tax, I suggest you start with Paying for the American Jobs Plan with a financial transactions tax from the Economic Policy Institute’s American Jobs Plan: A Five-Point Plan to Stem the U.S. Jobs Crisis.
Also check out The Benefits of a Financial Transactions Tax from the Center for Economic and Policy Research (CEPR).
I think I’m sufficiently progressive to be involved in this discussion. There are some real problems with a transaction tax as it’s commonly proposed.
The U.K. has what amounts to a transaction tax on equity trading. This is partially where calls for the U.S. to institute a transaction tax come from. But in the United States, not all transactions involve equities — and the really risky transactions use complex derivatives that are usually off-market.
It is true that a transaction tax would eventually decrease what’s called algorithmic trading in the U.S. because around 70 percent of the equity trading volume happens via a computer program, not a human trader. The tax wouldn’t generate meaningful revenues so much as it would prompt banks and funds to move their algo trading operations elsewhere.
Not a whole lot would change structurally with the market, although liquidity may move a bit slower. The tax would primarily be paid by long equity investors who didn’t do anything wrong in the first place. The massive, systemic risks — those whose structure is only limited by the bounds of the imagination (and contract law) — would still be there, untaxed and lightly regulated.
The Yes! Magazine article that AZSpot linked to introduces a way to remedy this: by taxing derivative transactions as though they’re equity transactions. I’m not sure where this idea comes from, but it’s wrought with bad consequences. Chiefly among them is that derivatives are actually a pretty common tool that corporate treasury departments use to hedge against legitimate business risks. They aren’t just for speculators. I wrote about this awhile ago:
Some companies use derivatives to hedge against legitimate risks that are beyond their control. Say an airline wants to lock in the current price of jet fuel for the next four years because they think the market price will rise and they’d rather spend a little capital now to ensure they won’t have to spend a lot more capital later. They’ll use derivatives to do that. That transaction is pretty good for everyone involved.
But many other companies use derivatives to, in effect, gamble on markets they either don’t understand or have no legitimate business reason for being in. Say an insurance company wants to write insurance contracts on the default of [mortgages] based on the prediction that housing prices will go up and up and up for ever and ever. They’lll use derivatives to do that. That transaction, however, is a financial time bomb.
Companies that use derivatives responsibly, to guard against risks that directly impact their business, should be able to do so without being regulated. But companies that use derivatives recklessly, to speculate on happenings outside their core focus, should be regulated more closely than they have been. Crafting regulation that separates these two groups is enormously challenging, and regulators have spent more time focusing on how to regulate the latter without coming to terms with how to not regulate the former.
Since there’s a big overlap between people who profit from systemic risk and people who pay capital gains tax, the starting point for this discussion should really be how much to raise the tax rate on capital gains.
That thing that everyone said would happen is now happening.
Background: Not to be outdone by Arizona, misguided lawmakers in Georgia in May passed their own “papers, please” law that allows law enforcement to question certain people about their immigration status. And, unlike Arizona’s…
Oh so now agricultural producers won’t be able to pay $5 per day anymore in Georgia? Ending the exploitation of undocumented migrants actually sounds pretty beneficial. (The “show me your papers” aspect of the law is obviously way too intrusive and open to abuse, though.)
One reason the story was so interesting to me is that, if the Associated Press’s reporting is reliable, Georgia’s undocumented workers* were on a compensation system that mixed the state minimum wage of $7.25 per hour with incentives for productivity. One laborer quoted in the story earned more than $20 per hour.
In crafting a policy that essentially seeks to replace undocumented workers with probationers, farms are finding the probationers won’t meet those benchmarks that turn substandard pay into adequate pay. To be clear: This is hard labor done in grueling conditions, and the minimum wage is too low to begin with (though I generally don’t have a problem with performance-based incentives), but my takeaway is that the legislation is turning an imperfect yet tolerable system into one that’s apparently producing an enormous amount of waste. The legislation isn’t working as intended, and Georgia’s lawmakers should be able to see that and act accordingly.
* Added later: Yes, this may be a wild conclusion to jump to. Some farms in Georgia doubtlessly do exploit undocumented workers. I’m referencing the institutional policy that applies to the ones that don’t, where lawmakers are pushing undocumented workers out of the (semi)legitimate farm jobs with minimum wages and incentives.
That thing that everyone said would happen is now happening.
Background: Not to be outdone by Arizona, misguided lawmakers in Georgia in May passed their own “papers, please” law that allows law enforcement to question certain people about their immigration status. And, unlike Arizona’s anti-immigrant legislation, the Georgia law also creates stricter reporting requirements for businesses that hire workers and harsher punishments for companies that employ undocumented workers.
Authorities in Georgia will begin enforcing the law July 1.
What’s happening now: Undocumented workers are now leaving Georgia en masse as the enforcement date approaches – leaving millions of dollars of rotting crops in the fields and sabotaging the state’s farming economy because no one else will fill the labor void they’ve left.
“Georgia labor officials estimate a shortage of some 11,000 workers in the agriculture sector, and the state has enacted a program where people on probation, who often have difficulty finding jobs, are sent into the fields,” reported the AFP. But employers are finding that, when given the opportunity to work in place of an undocumented laborer, America’s probationers aren’t nearly as productive. This disruption to Georgia’s farming economy will hurt consumers.
I guess House Majority Leader Eric Cantor is putting his money where his mouth is: Cantor is an investor in something called the ProShares Trust Ultrashort 20+ Year Treasury ETF, which “takes a short position in long-dated government bonds.”
To translate this into Human: Cantor invested a bit of money — he has plenty — in an investment fund that has the sole purpose of finding ways to profit off of bad things happening to the value of U.S. debt. Among the bad things that could happen that would make Cantor’s investment perform well is Congress failing to raise the debt ceiling, an issue Cantor is — err, was — directly involved in.
James S. Alesi (55th District)
Profession: Former small business owner. His company operated washers and dryers in apartment complexes and colleges.
Year elected: Alesi was elected to the New York State Senate in a Special Election in 1996 and has been re-elected every two years since.
Priority issues: Lowering taxes, preserving workers’ right to unionize, preserving funding arts and public education, state-level stimulus to create jobs in the technology sector.
Statement on marriage equality vote: None available.
Roy J. McDonald (43rd District)
Profession: Banker. McDonald is also a Vietnam War veteran.
Year elected: Roy was elected to the 43rd Senate District in 2008. Prior to that, he had served in the Assembly since February 2002.
Priority issues: Incentives to encourage military service, legislation to preserve local military sites, autism awareness, farm subsidies.
Statement on marriage equality vote: McDonald told the New York Daily News: “You get to the point where you evolve in your life where everything isn’t black and white, good and bad, and you try to do the right thing. … You might not like that. You might be very cynical about that. Well, fuck it, I don’t care what you think. I’m trying to do the right thing.”
Stephen M. Saland (41st District)
Profession: Attorney. Saland is of-counsel to Gellert & Klein, P.C.
Year elected: 1990.
Priority issues: Creation of the Hudson River Greenway, domestic violence prevention, child abuse prevention.
Statement on marriage equality vote: None available.
Mark J. Grisanti (60th District)
Profession: Grisanti is a third-generation attorney and is employed by his father’s law firm in Buffalo.
Year elected: Not cited.
Priority issues: Redevelopment of the Niagra Falls airport, legislative support for charter schools, Medicaid cuts.
Statement on marriage equality vote: Grisanti released a statement shortly after the voting: “As an attorney I analyzed the legislation and concluded that the amendments provide critical exemptions for religious institutions. Passage of this bill now rather than later ensures that these protections be included. I cannot deny anyone in my district and across New York the same rights I have with my wife.”