Dem lawmakers push Wall Street tax despite White House, GOP opposition

Dem lawmakers push Wall Street tax despite White House, GOP opposition

A group of congressional Democrats is pushing on with their efforts to enact a tax on financial transactions, in the face of what they acknowledge are long odds.

The financial transactions tax has prominent supporters in Europe, including President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany.

But the Obama administration has decided against embracing the idea, most recently at a meeting of the Group of 20 nations in France. Meanwhile, Republicans on Capitol Hill remain opposed to tax increases, and banking and financial advocacy groups are also fiercely against the transaction tax.

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Democrats backing the idea are well aware of those roadblocks. But they also say the transaction tax, which has also been endorsed by Bill Gates, would both help raise revenue to tackle deficits and rein in speculation in the financial world.

“The Republican majority will decide whether we take this bill up or it passes,” said Peter WelchPeter Francis WelchShakespeare gets a congressional hearing in this year's 'Will on the Hill' Democrats debate shape of new Jan. 6 probe On the Money: Tech giants face rising pressure from shareholder activists | House Democrats urge IRS to reverse Trump-era rule reducing donor disclosure | Sen. Warren, Jamie Dimon spar over overdraft fees at Senate hearing MORE (D-Vt.). “But it’s kind of hard to defend some of the conduct.”

Under the proposal introduced by Rep. Peter DeFazio (D-Ore.) and Sen. Tom HarkinThomas (Tom) Richard HarkinEx-Rep. Abby Finkenauer running for Senate in Iowa We need a voting rights workaround Romney's TRUST Act is a Trojan Horse to cut seniors' benefits MORE (D-Iowa), trading of stocks, bonds and certain other transactions would be hit with a tax of three basis points – or, essentially, a tax of .03 percent per trade.

DeFazio, Harkin and other supporters of the tax have said the levy would be especially aimed at more speculative short-term trading that they say is too prevalent on Wall Street these days.

“This would drive the most destructive, high volume, useless traders out of the market. Those people don’t set markets,” DeFazio, who has been calling for a transaction tax for years, told The Hill. “We built a great country without them. We don’t need them now.”

But groups like the Securities Industry and Financial Markets Association (SIFMA) and the Independent Community Bankers of America (ICBA) are lobbying against the tax, with SIFMA saying it will further weigh down a sluggish economy by hurting markets and investors.

“While financial tax proposals may not be intended to target community banks, which did not cause the financial crisis, we fear with reason that any tax on the financial sector will end up unfairly impacting all banks and their customers as the federal debt and deficit fuel a growing demand for additional revenues,” Camden Fine, ICBA’s chief executive, wrote to lawmakers on Friday.

Supporters of the tax had hoped that Obama’s trip across the Atlantic for the G-20 meetings would give the tax some momentum. The European Union, prodded by Sarkozy and Merkel, has proposed putting a transaction levy in place, while Great Britain and Switzerland are among the countries that already have some sort of transaction tax.

But a top administration official signaled in France that the White House would continue pursuing a different policy – a fee on the largest banks to help make up for policies like the Troubled Asset Relief Program.

“Both share in commonality the idea that the financial sector has an appropriate role to play in contributing to the resolution of the crisis,” Michael FromanMichael B.G. FromanOn The Money: Sanders unveils plan to wipe .6T in student debt | How Sanders plan plays in rivalry with Warren | Treasury watchdog to probe delay of Harriet Tubman bills | Trump says Fed 'blew it' on rate decision Democrats give Trump trade chief high marks US trade rep spent nearly M to furnish offices: report MORE, the deputy national security adviser for international economic affairs, told reporters. “And I think there is broad consensus between the Europeans that the President met with this morning and ourselves about the ability of each to go – to each pursue this in their own way in whatever way they see to be most effective.”

Some Democrats are skeptical about the Harkin-DeFazio approach as well.

Rep. Barney Frank (D-Mass.), the ranking member of the House Financial Services Committee, said the idea of the transition tax had merit. But he added that the U.S. should not implement that sort of tax unilaterally, saying it would hurt the country if other large market economies didn’t put the policy into place at the same time.

Faced with Republican opposition to new taxes on Capitol Hill, congressional Democrats behind the transaction tax are hoping the deficit-reducing supercommittee will consider the idea.

But either way, they say they believe the frustrations personified by the nationwide Occupy protests and the need for revenues will cause their approach, also known as the “Robin Hood Tax,” to receive another look. Just this last week, hundreds of union members rallied in support of the tax in Washington.

“Over the course of the next year, I think you’re going to be seeing more and more people scratching their heads,” said Earl BlumenauerEarl BlumenauerLawmakers spend more on personal security in wake of insurrection On The Money: Schumer pressured from all sides on spending strategy | GOP hammers HUD chief over sluggish rental aid | Democrat proposes taxes on commercial space flights Hillicon Valley: Biden to appoint Big Tech critic to DOJ antitrust role | House passes host of bills to strengthen cybersecurity in wake of attacks | Bezos returns from flight to space MORE (D-Ore). “And this is a very powerful alternative to things that are going to hit average Americans very hard.”