By Pam Martens: April 9, 2013
The Secretary of the Treasury, Jack Lew, has been in office a mere 15 business days and has already logged more foreign travel on the taxpayers’ tab than most executive branch personnel see in a year.
Lew was sworn in on March 20, 2013. Five days later he was sitting in Beijing chatting it up with China’s President Xi Jinping. Yesterday and today, he’s flitting about Europe. His agenda includes meetings in Brussels with European Council President Herman Van Rompuy, European Commission President Jose Manuel Barroso, European Commissioner for Economic and Monetary Affairs and the Euro and European Commission Vice President Olli Rehn, and European Commissioner for Internal Market and Services Michel Barnier. Lew was also scheduled to meet in Frankfurt with European Central Bank President Mario Draghi.
Today, Lew heads to Berlin to have a conversation with German Finance Minister Wolfgang Schauble. Lew’s meeting in Paris with French Finance Minister Pierre Moscovici was abruptly cancelled by Moscovici. The excuse given was a scheduling conflict but it may well be that the French Finance Minister didn’t like the feedback he was hearing from the earlier meetings.
While Lew’s boss, the President of the United States, was preparing to release his budget proposal tomorrow which will cut Social Security benefits for seniors, veterans and the disabled, Lew was shilling for Wall Street across Europe, talking down the imposition of a financial transaction tax.
This past February, 11 European countries, including Germany and France, agreed to the financial transaction tax which is expected to raise $45 billion annually. The tax would be imposed at the rate of 0.01 percent for derivatives and 0.1 percent for stocks and bonds.
In written responses during his Senate confirmation hearing, Lew said both he and the Obama administration oppose a similar tax in the U.S. Now it appears that Lew doesn’t just oppose the tax here in the U.S., but is using his bully pulpit to trash talk the tax among our trading partners. Particularly egregious is that he is traveling on the U.S. taxpayers’ dime to attempt to defeat a tax that the majority of Americans support.
In a 2012 national survey by the Mellman Group, 65 percent of respondents thought that increasing “taxes on Wall Street banks that helped create our economic problems” was a superior plan than reducing the nation’s deficit by cutting spending on Social Security, Medicare or environmental protection.” Such a U.S. tax would support another public interest – slowing the use of high frequency trading which is effectively looting the retail investor.
But despite that lopsided public opinion, the President proposes to shift the burden to seniors by using a chained CPI to cut Social Security benefits while his Treasury Secretary, who took $940,000 in taxpayer bailout funds to Citigroup as a personal bonus for himself, tries to stall a tiny tax on Wall Street by shuttling across Europe on the U.S. taxpayers’ dime. Does it get any more revolting than this?
According to Jim Brunsden, writing for Bloomberg News yesterday, Lew raised concerns at a meeting with a European Commission official “that plans by some EU nations to implement a common tax on financial transactions would lead to charges being imposed on U.S.-based companies” according to people present at the meetings. While it’s true that U.S. energy and agricultural companies who hedge their risk through derivatives would pay a tiny tax, the real impact would be on the speculators who are using high frequency trading to rig the market in their favor and are widely blamed for the Flash Crash of May 6, 2010 where hundreds of stocks momentarily lost as much as 60 percent of their value and the overall market plunged 998 points.
On September 7, 2010, former SEC Chair Mary Schapiro explained high frequency trading as follows to the Economic Club of New York: “These high frequency trading firms can generate more than a million trades in a single day and now represent more than 50 per cent of equity market volume.”
Jack Lew will return from his whirlwind European trip this evening, just in time to prep for presenting the President’s budget to the House Ways and Means Committee at 10 a.m. this Thursday and before the Senate Finance Committee that afternoon at 2:30 p.m.
Lew appears to be staking out an outsized role in running Obama’s second term – for the benefit of Wall Street and the detriment of Main Street. And what’s most troubling about this is the fact that President Obama seems to be pushing Jack Lew out in front.