The decades since 1975 have witnessed a breathtaking upward transfer of income and wealth in America from the bottom 90 percent of earners to the richest 1 percent. Over the past thirty-five years, meanwhile, the average Wall Street bonus has risen by a factor of more than 1200. As of April, roughly half of all households had lost income over the past year while the nation’s billionaires have nearly doubled their fortunes.
It’s a gobsmacking plunder of wealth in desperate need of an aggressive response, and an atrocious misallocation of resources that could otherwise be invested in health care, housing, education, and other social goods. In this spirit, Senator Bernie Sanders and Congresswoman Barbara Lee last month reintroduced a modest and straightforwardly commonsensical idea: a new tax of a fraction of a percent on financial transactions like stock trades, bonds, and derivatives. Their bill, the Tax on Wall Street Speculation Act, enjoys strong support from a long list of grassroots and public-interest organizations and has the backing of Senator Kirsten Gillibrand and at least ten House Democrats (a parallel bill, the Wall Street Tax Act, sponsored by Congressman Peter DeFazio and Senator Brian Schatz, is also currently sitting before Congress).
If implemented, it could raise as much as $2.4 trillion in new revenue over the next decade. As Beth Markman of Public Citizen points out, the majority of investors would barely be affected if even affected at all — the proposed financial transaction tax mostly impacting high-frequency traders, hedge funds, and day traders. A 2019 analysis of a 0.1 percent financial transaction tax (FTT) by Public Citizen, for example, projected that a typical middle-income family with a few investments might expect to pay about $13 a year.
A more recent study from the organization, however, reveals the extent to which corporate interests are fighting the idea. Among other things, its newly published report, Hypnotized by Wall Street’s Lobbying and Campaign Contributions, offers a remarkable snapshot of the way lobbying and political financing rules enable corporate actors to dwarf public-interest groups and neutralize even the most popular and relatively modest reforms.
The study, released last week, finds that a resounding corporate effort has been underway in opposition to an FTT, with groups like the US Chamber of Commerce and the Securities Industry and Financial Markets Association conscripting an army of lobbyists in their campaign to spread erroneous talking points about who would be impacted by the tax. Of the ten organizations that have the most lobbyists working on the FTT, nine are opposed (the other, AARP, has not issued any public statement of support or opposition). More striking, though, is the scale with which those organizations have been pouring money into their efforts via direct contributions to politicians: groups lobbying against the FTT donated over $32 million to both members of Congress and national party committees in 2018, and over $41 million last year.
Some contributions have been made with a quite overt strategic goal in mind. As the report notes:
Anti-FTT lobbying groups are strategically targeting contributions at specific members of Congress that are central to the passage of the FTT and investment related bills. Rep. Patrick McHenry (R-N.C.), Ranking Member of the U.S. House Financial Services Committee, is arguably the most vocal opponent of the FTT in Congress. He received the second highest amount of money from FTT lobbying groups out of any member of the House. McHenry received $703,930, combined, in the 2018 and 2020 election cycles.
It’s just one small case study in the way that Wall Street is regularly able to drown out public-interest associations and dominate political conversation around key issues. Even well-organized groups like unions and nonprofits are rarely, if ever, able to match the lobbying and campaign donation strategies undertaken by financial giants, oil companies, or other corporate entities. Wall Street firms regularly give to members of both parties, the upshot being that big-business cash simply becomes a kind of ambient presence in most lawmaking and political debates of consequence.
It’s one reason among many that America badly needs to tax away the wealth and power of Wall Street. And it’s also why doing so is nearly impossible.