The Midmorning Refill: While middle-class feels the pain, Wall Street laughs all the way to the bank

Today’s Flickr photo

A winter postcard from Cambridge, England. Flickr photo by .mush_king.

 

If you read one thing today . . .

Economist Dean Baker in the Talking Points Memo builds the case for a financial speculatin tax on stock market trades — a move that could raise $150 billion a year from Wall Street banks. It only seems fair that when the rest of us are worrying about our jobs and making mortgage payments that Wall Street “share the pain.” Not likely. Despite the recession, the banks, thanks mostly to a government bailout, are turning out huge profits and once again ready to  pay out obscene bonuses.

What is really great about a financial speculation tax is that the Wall Street banks would pay almost the entire tax. The economics on this is very simple. If a tax makes trading shares of stock, options, or other assets more expensive than people will trade less. For example, if a tax doubles the price of trading shares of stock, research shows that people will trade roughly half as much.

This means that investors will spend roughly the same amount on their trading with the tax as they did without the tax. They will pay twice as much per trade, but since they trade half as frequently, they end up paying the same amount on their trading.

Instead the cost of the tax will be born by Wall Street. The banks will have to absorb pretty much the full cost of the tax. This explains why prominent people in Washington have so little interest in financial speculation tax.

Overheard

Adam Liptak in the NYT looks at the U.S. Chamber of Commerce’s success arguing cases before the U.S. Supreme Court. Not surprisingly, big business has done extremely well.

“The Roberts court appears to be a mainstream, traditional, modern Republican, conservative court,” said Bradley W. Joondeph, a law professor at Santa Clara University and a former law clerk to Justice Sandra Day O’Connor. “Part of its constellation of commitments is against the regulation of business and, in particular, the regulation of business through litigation.”

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The Midmorning Refill: The U.S. Supreme Court doesn’t favor business? News to us

Today’s Flickr Photo

 

Supreme Court Justice Elena Kagan and Chief Justice John Roberts. Flickr photo by TalkMediaNews.

 

If you read one thing today . . .

Because it’s not everyday that we get to hear sitting U.S. Supreme Court justices talk about the Court’s decision-making process, this Bloomberg News interview with Justice Stephen Breyer caught our interest, especially the headline that proclaimed, “Breyer says U.S. Supreme Court doesn’t have pro-business slant.” Come again? Saying the conservative-leaning Court doesn’t have a pro-business slant is like saying that Glenn Beck doesn’t have a flair for self-promotion. In this case, however, I think there’s a nuance to Breyer’s remarks. What he says is that the current Court is no different than those from years gone by. Historically, the U.S. Chamber of Commerce and business always do well. Bloomberg reporter Greg Stohr writes:

Breyer also said that partisan politics doesn’t influence the court’s actions, even in cases with political ramifications, including the decision this year that allowed unlimited corporate and union campaign spending, and the Bush v. Gore ruling that decided the 2000 presidential election.

“I don’t see that politics,” Breyer said. “It would be bad if it were there. And I don’t see it.”

Overheard:

From a Washington Post story about politics in the age of Facebook:

“So you have 50,000 Facebook fans – what the heck are you going to do with them?” said Vincent Harris, a GOP new-media consultant for numerous 2010 candidates. “Campaigns this cycle are in this frenzy of numbers, numbers, numbers. But how do you effectively reach these people and activate them?”

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This political message is paid for by … who knows?

It’s almost as if the folks at the Federal Election Commission have thrown up their hands and decided that policing the political spending by outside groups just isn’t worth the effort. Consider that in 2004 there was almost complete disclosure on who was paying for the issue ads flooding our airwaves. Today? Not so much. A new study by Public Citizen shows that more than two-thirds of outside groups spending heavily on electioneering communications this year  are not reporting who is bankrolling their ads.

A lot of this has to do with the new feeling of corporate empowerment that has taken hold since the U.S. Supreme Court ruled in January that corporations have a right to spend an unlimited amount from their treasuries to influence voters.  The Public Citizen study shows:

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Big business has money to burn this election season

How excited is big business about the upcoming elections? Well, consider that one political action committee that spent $2 billion on election advertising in 2008 (a presidential campaign year) is looking to double its investment during this year’s midterms. Peter Stone in Mother Jones gives us a look at what the Business Industry Political Action Committee is doing to gear up for the Congressional campaigns. The reason for their excitement is this year’s disastrous U.S. Supreme Court ruling in Citizens United v. Federal Election Commission, which cleared the way for unlimited corporate spending in our elections. Stone writes:

BIPAC president Greg Casey, though cautious about where and how the group might deploy these new tools, acknowledges that “the nature of the court ruling gives us a lot more places and activities for political communications than we had before.”

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Money & Democracy Update: Outrage growing over Target’s campaign spending

Stunning Statistics of the Week:

Amount financial industry has spent on lobbying this year: $251 million

Amount Citigroup spent on lobbying during the first half of 2010: $3 million

Amount Goldman Sachs spent on lobbying in the first half of 2010: $2.7 million

Amount Bank of America spent on lobbying in the first half of 2010: $2.1 million

Goldman Sachs says it won’t make direct expenditures on electioneering

Goldman Sachs is taking the high road – sort of.

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Citizens United: The Fallout

Public Citizen President Robert Weissman talks about what is needed to undo the damage from the U.S. Supreme Court’s ruling in Citizens United v. Federal Election Commission. Weissman says nothing short of a constitutional amendment will stop the unlimited flow of corporate money into our elections. Learn more about Public Citizen’s campaign for a constitutional amendment at www.DontGetRolled.org.

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