Dean Baker
Center for Economic and Policy Research
Wednesday 8 August 2012
The Knight Capital debacle last week gave us yet another example of the financial system run amok. The company’s computers were apparently misprogrammed. As a result, they caused wild gyrations in the price of several major stocks. This incident naturally brings back memories of the “flash crash” two years ago, when programmed trading sent stock prices plummeting by close to 10 percent for no reason whatsoever. In the era of high-speed trading, it seems that such events are inevitable.
Whatever hardships befall the victims of such occasional mischief, it’s not clear that we should be any happier when the programs are working as planned. After all, many of these programs are designed to pick up large trades and effectively jump in ahead of the trader.
For example, if a major investor or mutual fund was in the process of selling a large amount of G.E. stock, a high-speed program may detect the movement. The high-speed trader could then short G.E. stock and buy it back immediately after the big sale and get a guaranteed profit. This has the same effect on the stock market as insider trading. Insider trading is bad for markets because it means that normal investors will get a smaller share of the gains. The same holds true with the high-speed trading platforms that now dominate the market.
A modest financial speculation tax can go a long way to putting an end to such practices and bringing the markets back to earth. It can also raise large amounts of money. A bill proposed by Senator Tom Harkin and Representative Peter DeFazio would impose a tax of just 0.03 percent on trades. According to the Joint Tax Committee of Congress, it would raise more than $350 billion in its first nine years. A set of taxes more in line with the 0.5 percent tax that the United Kingdom imposes on stock trades could raise more than $1.5 trillion over the next decade.
Even the higher set of taxes would raise the cost of transactions only back to their early 1990s levels. And the United States already had very liquid financial markets by 1990. In short, a financial speculation tax is a great way to raise lots of government revenue by making financial markets better serve their purpose of transferring capital from savers to investors.
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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He previously worked as a senior economist at the Economic Policy Institute and an assistant professor at Bucknell University. He is the author of several books, including Plunder & Blunder: The Rise and Fall of the Bubble Economy, The Conservative Nanny State: How the Wealthy Use the Government to Stay Rich and Get Richer and The United States Since 1980.
He was the editor of Getting Prices Right: The Debate Over the Consumer Price Index, which was a winner of a Choice Book Award as one of the outstanding academic books of the year. He appears frequently on TV and radio programs, including CNN, CBS News, PBS NewsHour, and National Public Radio. His blog, Beat the Press, features commentary on economic reporting. He received his B.A. from Swarthmore College and his Ph.D. in economics from the University of Michigan.
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09 Aug 2012
By most accounts, Republican presidential nominee Mitt Romney is a devoted father, dedicated family man and committed church leader. But as his record sadly shows, Romney's family values often take a back seat to his presidential ambitions. Just last week, he cast aside his father George Romney, the man whose rags-to-riches success story Mitt uses as a proxy for his own, all in the name of keeping his mysterious tax returns secret. His wife Ann Romney, the woman who now heads his Women for Mitt Coalition and who her husband says "reports to me regularly" regarding what American women care about, has been hung out to dry over issues including Planned Parenthood, abortion and the family's personal finances. And as it turns out, Mitt's betrayals hardly end there.
In his interview with David Muir of ABC last week, Governor Romney trotted out a new defense of keeping his secret tax returns secret:
"From time to time I've been audited as happens I think to other citizens as well and the accounting firm which prepares my taxes has done a very thorough and complete job pay taxes as legally due. I don't pay more than are legally due and frankly if I had paid more than are legally due I don't think I'd be qualified to become president. I'd think people would want me to follow the law and pay only what the tax code requires."
Put another way, if you paid a penny more to Uncle Sam than you could've, you're not just a sucker; you should be disqualified from becoming President.
Just like Mitt's dad, George Romney.
Mitt's idol didn't merely establish a precedent by releasing 12 years of tax returns during his failed 1968 presidential campaign. As Paul Krugman recently reminded voters, the auto magnate and Michigan governor not only paid a lot to the U.S. Treasury, but probably much more than he needed to.
Those returns also reveal that he paid a lot of taxes - 36 percent of his income in 1960, 37 percent over the whole period. This was in part because, as one report at the time put it, he "seldom took advantage of loopholes to escape his tax obligations."
(The contrasts between father and son hardly end there. As Rick Perlstein documented, George Romney didn't merely develop an innovative profit sharing plan for his employees at AMC and return bonuses if he thought them too high. He also believed that "rugged individualism" is "nothing but a political banner to cover up greed.")
But if Mitt Romney has turned his back on the legacy of his late father, he has similarly shown no compunction about tossing his wife Ann overboard when political circumstances dictated.
Circumstances like those in 2002, when Romney was trying to run for Governor of Massachusetts. Its constitution requires gubernatorial candidates to have been Massachusetts residents for seven consecutive years. Unfortunately, Mitt had not just been running the Salt Lake City Olympics the past the past three years, but also paid discounted property taxes to Utah while claiming his $3.8 million Park City area mansion was his "primary residence." As the Deseret News reported on April 11, 2000, "Romney has declared his Deer Valley home his primary residence for tax purposes."
And while Romney pointed the finger at his accountants at PriceWaterhouseCoopers for his failure to file as a Massachusetts resident in 1999 and 2000, he also blamed his wife, Ann Romney:
Romney said he didn't see the property tax bills for his $3.8 million home in Park City Utah because the home was in his wife Ann's name and she paid the tax bills.
(After paying amended taxes in Massachusetts and sending Utah a check for $54,000 for the discount he shouldn't have received, Romney survived a Democratic challenge before the state Ballot Law Commission. But with this week's revelations regarding his efforts to cut the property tax bill on his $12.4 million La Jolla, California beach front home, Mitt's status as a registered voter in Belmont, Massachusetts may once again be called into question.)
But that episode pales in comparison to Mitt's tortured history on reproductive rights for American women. For that, he used Ann Romney as a disposable human shield, which could be discarded as needed.
While Romney now claims he wants to "end" Planned Parenthood, he didn't always feel that way. As ABC News revealed in 2007, Romney during his 1994 Senate run against Ted Kennedy attended a Planned Parenthood event.
During a time when he was trying to establish his pro-choice bona fides with liberal Massachusetts voters, Mitt's wife Ann wrote a check for $150 to the organization. When presidential candidate Romney said in 2007 that he had "no recollection" of the fundraiser, then president and CEO of the Planned Parenthood League of Massachusetts. Nichols Gamble seemed surprised:
"I can understand that he might not remember the check - it's surprising to me that he would not remember the event. His main motivation for being there was a political motivation."
Whatever Mitt Romney's motivation in 1994, in 2007 his run for the GOP presidential nomination required a different answer. As Romney explained in May 2007, what his wife did - the same woman who with her entire family converted to her husband's Mormon faith - did not reflect on him. As the New York Times reported:
"Her positions are not terribly relevant for my campaign."
Ann Romney went along with the new script. In a January 2008 interview in Florida, Mrs. Romney brushed off a question about the contribution, protesting "that was 14 years ago and $100. Do you really think I'd remember?"
If not, she doubtless remembered testifying to her husband's position 10 years ago that he was "effectively pro-choice." As Romney's wife Ann explained during his 2002 race for governor, Massachusetts voters need not worry about moderate Mitt protecting the right to choose:
ANN ROMNEY: I think women also recognize that they want someone who is going to manage the state well. I think they may be more nervous about him on social issues. They shouldn't be, because he's going to be just fine. But the perception is that he won't be. That's an incorrect perception.
MITT ROMNEY: So when asked will I preserve and protect a woman's right to choose, I make an unequivocal answer: yes.
But Ann Romney wasn't the only family member Mitt deployed and later discarded in order to make his case as a reliable pro-choice leader for Massachusetts voters. As Salon's Justin Elliott documented in "The Abortion That Mitt Doesn't Talk About Anymore," it was his own family story which Romney claimed during his 1994 Senate run against Ted Kennedy informed his - and his mother's - pro-choice position. When Kennedy labeled him "Multiple Choice Mitt," during their debate, Romney responded with a tale of personal loss:
"On the idea of 'multiple-choice,' I have to respond. I have my own beliefs, and those beliefs are very dear to me. One of them is that I do not impose my beliefs on other people. Many, many years ago, I had a dear, close family relative that was very close to me who passed away from an illegal abortion.
It is since that time that my mother and my family have been committed to the belief that we can believe as we want, but we will not force our beliefs on others on that matter. And you will not see me wavering on that."
But waver he did. American voters who missed those Massachusetts campaigns wouldn't know of the existence of Ann Keenan, the sister of Romney's brother-in-law who died at the age of 21 in 1963 after a botched, illegal abortion.
Of course, as this 2007 exchange with Tim Russert showed, Mitt Romney no longer wants you to know about her, either:
RUSSERT: You talked about your family relative who died from an illegal abortion, and yet President Romney is saying ban all abortion. And what would be the legal consequences to people who participated in that procedure?... So back to your relative.
ROMNEY: Mm-hmm.
Romney went on to explain the consequences (loss of license and possible prison time for doctors, though not patients) of his new found anti-abortion views. But he never did get back to his relative.
That's because the tragic story of "dear, close family relative" Anne Keenan wouldn't have been very popular with conservative Republican primary voters. Like Mitt's father, mother and wife (and even their horse Rafalca), she became political road kill on Romney's road to the White House.
And that public mistreatment of his loved ones says an awful lot about the character of the man. After all, if there's anything worse than being strapped to the roof of Mitt Romney's car, it's being thrown under the bus.
(This piece also appears at Perrspectives.)
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