While the debates over AOC's Green New Deal and every socialist candidate's "MMT-based" platform have mercifully faded in recent weeks, discussion how to make college affordable and debt free is only just starting, and on Wednesday, Vermont socialist and Democratic presidential candidate Bernie Sanders said he'll introduce legislation that would impose a tax on trades of all stocks, bonds and derivatives in the U.S., a move he says would "help curb Wall Street speculation and help finance his campaign promise to provide tuition-free college and cut student debt."
It wasn't clear how making traders earn less on their trades, and thus incentivizing them to take even greater risks and promote even more Wall Street speculation would help reduce record high tuition costs, which are only possible due to easy access to student loans, allowing colleges to demand any price, which students - relying on someone else's loan - will be happy to pay it. But we digress.
The proposal is hardly unexpected: as Bloomberg notes, Sanders has been pushing for a financial transactions tax since his run for the Democratic nomination in 2016. According to his Wednesday proposal, the US would apply a 0.5% tax rate for stock trades, a 0.1% rate for bond trades, and 0.005% for derivatives transactions.
In theory, the tax would both provide a disincentive for high-frequency trading based on algorithms and let Wall Street help middle-income Americans who helped foot the bill for the bailout of financial institutions after the 2008 market crash, according to an outline from the Vermont senator's office. In practice, however, trade will simply decline to the point where there is even less liquidity; should Bernie's proposal prove to be "overly successful", even the smallest drop in stocks will be magnified by the total collapse in liquidity, and result in a crash that wipes out trillions in value. Then again, since that "value" is fake to begin with, and only the result of central bank intervention, perhaps Bernie's plan is not one to make college free, but to actually reset the system.
In which case, sign us up.... although we are skeptical that Bernie has thought this all the way through.
“It is time for Wall Street to pay society back for the incredible damage it did – and continues to do – to the middle class of this country,” Bernie's statement says. Sanders plans to release further details Wednesday at a news conference outside the Capitol with Representative Barbara Lee, a California Democrat who is sponsoring the measure in the House.
As he did in 2016, Sanders said the tax would generate enough revenue to offset the costs of tuition-free college and help to pare down student debt. Then again, since there is $1.6 trillion in student debt outstanding, we somehow doubt this plan will achieve its lofty ambitions.
But before traders lose too much sleep, there is a silver lining: Bernie's plan has absolutely no hope of passing (for now). As Bloomberg notes, Sanders has been unveiling a series of proposals that have little chance of passing in Congress. And yet, his proposals underscore the progressive ideas he's highlighting in his fight for the 2020 Democratic presidential nomination in a crowded field; ideas which many of his radical left peers will likely adopt should one of them win the presidency next year.
Last week, he joined Democratic Representative Alexandria Ocasio-Cortez on a measure to enact a federal limit of 15% on credit card interest rates. He's already proposed an expanded estate tax that would hit individuals worth at least $3.5 million when they die.
Successful or not, Sanders’s latest proposal adds to the ways he is making taking on Wall Street and corporations a top theme in the 2020 race among progressives, and especially as contrasted with his biggest Democratic challenger, Joe Biden. Sanders is highlighting contrasts with the former Vice President, the current front-runner in the race, who is offering a more centrist alternative to a largely left-leaning field of nearly two dozen Democratic contenders.
Bernie is also competing with Elizabeth Warren who’s built her reputation as a harsh critic of Wall Street and as a champion for consumers. Warren has proposed creating an annual wealth tax on households valued at $50 million and more.
To appeal to socialists everywhere, Sanders also reintroduced a “Medicare for All” proposal whose co-sponsors include four of his presidential primary rivals: Warren, Kamala Harris, Cory Booker and Kirsten Gillibrand. He also has proposed a broad overhaul of policies affecting small-town family farmers and the agriculture industry, which according to Bloomberg would include a moratorium on new agribusiness mergers. Considering that Bayer's recent purchase of Monsanto may soon put the German conglomerate out of business, there is at least one company that wishes Bernie had already implemented that particular block.