Lewis: Somebody's got to pay for this mess
"Let Wall Street Pay" is not quite as pugnacious as "Make Wall Street Pay."
But it's still an "in-your-face" verbal assault on Wall Street.
"Yes," agreed Colorado Democrat Rep. Ed Perlmutter, co-sponsor of the "Let Wall Street Pay for the Restoration of Main Street Act of 2009."
"I didn't come up with the title," he smiled, unapologetically.
The proposal, also sponsored by Oregon Democrat U.S. Rep. Peter DeFazio, would place a modest transfer tax on trades of stocks, options, futures and credit default swaps. It hopes to raise $150 billion a year to reduce the federal deficit and create jobs.
It mostly targets giant, bailed-out banks — such as Goldman Sachs, Bank of America, Citigroup, J.P. Morgan Chase, Wells Fargo and Morgan Stanley — that make "5,000 trades per second," Perlmutter said.
It doesn't apply to retirement accounts or people who make fewer than $100,000 a year in trades, Perlmutter said. The Investment Company Institute, however, says it could hurt middle-class investors who buy exchange-traded funds and mutual funds.
A similar tax was in place from 1914 to 1966.
The bill has yet to be introduced. Few have read its initial draft. But as it circulates through Washington in search of congressional sponsors, it's sparking a firestorm.
It's so hot, not even Barney Frank or Nancy Pelosi will touch it. And it's far from clear that President Obama ever would sign it.
Perlmutter didn't seem discouraged, despite taking a few beatings on national TV and even in his hometown newspaper.
"I'm getting a lot of calls from Fox News," he said, "and where there's a lot of pushback, it means there's something there."
Most of the pushback has been the predictable antitax/antigovernment soundbites that accompany any tax proposal. And so far, the most-violent reactions target that Jim Cramer guy, who looks a little bit like me and plays a stock trader on CNBC.
Cramer went so far as to say Wall Street probably deserves the tax. He added that he could live with it because it would reduce the deficit and create jobs, which — ahem — would benefit Wall Street, too, in time.
The "tidal wave of fury" Cramer unleashed made for a headline in the New York Post, "Cramer Vs. Furor."
Cramer responded on his website: "If this is going to be another round of death threats against me and my family, and I have to call the FBI again because of things that were promised to happen to my family, well, let's just say I am ready."
Then on Tuesday, Cramer was ready to reverse his position. He now says he is against the tax.
It's "Wall Street vs. America," said Perlmutter, referencing a recent headline in BusinessWeek. The article notes the crushing fees investment banks are charging cities and local governments as their tax bases disintegrate.
But critics say taxing America's biggest banks further might only force them to move somewhere else. Perlmutter says let the ingrates go.
"If they go to the Cayman Islands or Antigua, my guess is that (those nations) can't help them the next time they need to get bailed out," he said.
And if they go to Europe, several European nations are considering similar transfer taxes to help pay for the bailouts they financed.
Before Perlmutter was elected to Congress in 2006, he was an attorney specializing in commercial litigation and Chapter 11 bankruptcy reorganizations. His clients included banks, credit unions, construction firms, real estate companies and the insurance industry.
"I thought when I was elected to Congress that I wasn't going to be dealing with bankruptcies again, and it's been just the opposite with the break down and collapse of Wall Street."
Wall Street banks put the U.S. economy at the precipice of another Great Depression.
Instead of suffering the bankruptcy-court decisions they deserved, they received trillions of dollars in government support. And they continued to pay their executives outlandish bonuses all through the crisis.
"The banking system is back on its feet, and apparently Wall Street is on pace to have record profits this year," Perlmutter said. "But Main Street is struggling."
Unemployment is officially at 10.2 percent. The housing crisis, the commercial real estate crisis and even the credit crunch linger on. This year's federal deficit is $1.4 trillion and is expected to remain in the trillions for years to come. America's infrastructure is crumbling. And nobody can agree how to fix Social Security or Medicare as America's baby boomers grow old and push these systems toward insolvency.
Perlmutter's proposal is yet another unpleasant reminder that we're all just arguing around a restaurant table about who is going to pay what part of the tab.
The sad fact that nobody wants to face is that somebody will be hit with higher taxes.
The inescapable question is simply who.
"Americans have a basic sense of fairness," Perlmutter said. "Americans will help somebody. But when they need help. They need to get it back. This has been a one-way street to Wall Street. It needs to be a two-way street.
"We rescued Wall Street. Wall Street can help Main Street. It's that simple."
http://www.denverpost.com/business/ci_13900759