ORLANDO, Fla. – It’s one thing to demand that Wall Street should pay for the economic crisis it created but it’s quite another to figure out how to make the banks cough up all that money. Union leaders at the AFL-CIO executive council meeting here last week made it clear that they have a plan that would do the job.
Elements of that plan emerged from an interview with Damon Silvers, the federation’s policy director, who also sits on the oversight committee set up by Congress to monitor what the banks are doing with their bailout money.
Silvers said we must start by recognizing that “we don’t have a deficit problem. Our economy suffers from a lack of economic activity and demand and we need more, not less government activity.”
“If the government pulls back on spending,” he said, “we indeed will develop a long-term deficit problem.”
The money to fund government spending is readily available from Wall Street, “the folks who created the mess and the folks who ought to pay for cleaning it up,” Silvers said.
The AFL-CIO, he said, is in full support of President Obama’s call for the banks to pay back the cost of the Troubled Assets Relief Program, and is also supporting calls for higher taxes on CEOs. While these moves could raise as much as $70 billion, he said, it will take much more if the government is going to fund the kinds of massive jobs programs that are needed.
One of the most innovative labor proposals is for a financial transactions tax.
The idea is that a tiny tax of three to five one hundredths of one percent (.003 to .005 percent) would be levied on every single Wall Street transaction, including stocks, bonds and futures.
“For the legitimate investor,” Silvers said, “this tax would not be prohibitive at all. For speculators and gamblers who enter the market and buy and sell at astronomical frequency rates to make a killing – well they would be paying a bit more. But then, this is what we want to do. We want to discourage the financial recklessness that led to this crisis.”
European economists, Silvers said, estimate that such a tax on big business would produce enormous public revenues. The tax would bring in, worldwide, “something on the order of 3 percent of world GDP. Reasonable calculations of the U.S. portion of that amount to about $400 billion.”
Conservatives claim this would drive the U.S. financial markets overseas. Silvers challenged this notion, saying that there is support for such a tax throughout Europe and “there is even a version of this type of tax already in place in Hong Kong.”
The International Trade Union Confederation also supports the plan, he noted.
Asked whether labor had approached the Obama administration with this idea and, if so, what the response had been, AFL-CIO President Richard Trumka said, “Yes we have raised it and on the issue of support it depends on who you talk to in the administration. Some like the idea and others say they are not so sure.”
The AFL-CIO is a major part of a coalition called Americans for Financial Reform. That coalition also calls for creation of a consumer protection agency, regulations on the shadow markets and separating the functions of regular and commercial banks.
Unions and their allies have called for a Week of Action beginning March 15. The plan is to picket, march and rally in front of financial institutions in 200 cities across America.