As 2012 kicks into gear questions remain about Obama's relationship to Wall Street going forward. For many it's rather clear - he takes their money and does their bidding. For others there is a lingering though diminishing hope that Obama is patiently waiting for his opportunity, taking the money that he needs but waiting for his moment to strike - hope springs eternal or hopium is addictive.
For the second group, those who will voyage to any territory in their minds to see Obama as progressive reformer - the Obamanauts - there is some justification to boot up, from HuffPo:
Advocates of a tiny but lucrative tax on financial transactions are increasingly hopeful that President Barack Obama's need to more firmly establish himself as the Main Street candidate in 2012 will lead him to back the measure.
A Financial Transaction Tax is tax on financial transactions like the sale of securities. The financial firms are only taxed when they perform the transactions. The tax itself is often used as a tool, not to collect revenue, but to discourage reckless speculation - like the kind that caused the 2008 crisis. Collecting revenue would be a bonus.
What may be even more interesting is the United States has already had a financial transaction tax, from Wikipedia:
The US imposed a financial transaction tax from 1914 to 1966. The federal tax on stock sales of 0.1 per cent at issuance and 0.04 per cent on transfers. Currently, the US has a very minor 0.0034 per cent tax which is levied on stock transactions. The tax, known as Section 31 fee, is used to support the operation costs of the Securities and Exchange Commission (SEC). In 1998, the federal government collected $1.8 billion in revenue from these fees, almost five times the annual operating costs of the SEC.
The bill for the tax has already been introduced and scored, from HuffPo again:
Sen. Tom Harkin (D-Iowa) and Rep. Peter DeFazio (D-Ore.) introduced legislation last month that would impose a 0.03 percent fee on financial transactions, an amount so small that its sting would only be felt by speculators who rapidly move vast sums in and out of trading positions.
But because of the enormous volume of transactions, the new tax would still raise $350 billion in next 10 years, according to nonpartisan congressional scorekeepers.
(h/t Horace and WallstSalesTax.org)
The hardest hit would be those engaging in High-Frequency Trading (HFT) and if there is an example anywhere that Wall Street creates no value it is HFT - computers trading at lightning speed to make miniscule profits. The argument for HFT is that is creates "liquidity" but that's total bullshit as has been continually demonstrated that the second you need liquidity in the market is the same second it isn't there now you see it, now you don't.
HFT also crashed the markets in what has become known as the Flash Crash
Needless to say, no tears if HFT gets more restrained.
The tax seems to be gaining some traction in D.C, from HuffPo again:
The bill is "generating some interest in the White House, and I'm hopeful that the president will pick up on this," said Harkin, a fifth-term senator.
"I think there's interest in the White House at looking at sources of revenue, and I think this is one that's got their interest," Harkin said. "They haven't said yes, they haven't said no."
Mike Lux, a progressive strategist, said he thinks that despite some internal opposition within the administration -- most notably from Treasury Secretary Timothy Geithner -- the tax may be an idea whose time has come.
"I know that Geithner remains adamantly opposed to it, but I also get the sense that the political folks in the White House understand that Geithner's positioning isn't always the right thing for the president to do politically," Lux said. "There is sort of a growing awareness of that."
A White House spokesperson, asked to explain the administration's current position, referred The Huffington Post to a Treasury spokesperson, who declined to comment.
Perhaps the most ironic twist in all this is mutli-millionaire hedge fund consultant and fmr. Obama economic advisor Lawrence "Women Can't Do Math" Summers endorsed the idea in his younger years:
In a 1989 paper, a younger Larry Summers wrote: "Such a tax would have the beneficial effects of curbing instability introduced by speculation, reducing the diversion of resources into the financial sector of the economy, and lengthening the horizons of corporate managers."
To recap, this is a tax that:
1. Would fall squarely on Wall Street/FIRE Economy
2. Would raise needed revenue ($350 billion in next 10 years)
3. Would help curb dangerous speculation like HFT
4. Would "lengthen the horizons of corporate managers" by creating more stability
So the question remains... is Obama ready to Occupy Wall Street?