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As Nelson Floats War Bonds, Actual Revenue-Raisers Shot Down

Ben Nelson has introduced his profoundly silly bill to deficit-finance the wars in Iraq and Afghanistan and just call that borrowing a different name:

The United States would begin financing its military engagements in Iraq and Afghanistan with war bonds under new legislation introduced Tuesday.

Sen. Ben Nelson (D-Neb.) unveiled the “United States War Bonds Act of 2009” early this afternoon, which would authorize the Treasury Department to begin selling bonds to fund the wars.

The bonds, Nelson said, would be purposed with helping to pay for the military efforts, in particular the surge of 30,000 troops in Afghanistan, without having to resort to the “war surtax” that has been discussed by some liberals in the House and Senate.

The language of the bill is pretty short, in keeping with the relative worthlessness of the idea. Um, Ben? When we pay for wars through structured finance, we’re pretty much using bonds, got it?

Meanwhile, on planet Earth, one of the President’s top economic advisers is downplaying a revenue-raiser that isn’t as fanciful – the financial transaction tax:

Today, at the Economist’s World in 2010 conference (attended by ThinkProgress), Council of Economic Advisers member Austan Goolsbee was asked about the transactions tax. He said he thinks such a tax “would be hard” to implement, and that the FTT was merely a “serving as a proxy” for more robust financial regulation:

It’s clear it would have to be done by everybody, and don’t overlook the temptation of a bunch of small — there are a whole bunch of, I don’t know if it would be Singapore or somebody who wants to be a financial center — saying ‘everybody else is going to tax your transactions but we won’t, so you should move all your stuff here.’

So I think it would be hard…Tobin himself would often say ‘well I don’t know if it exactly could work,’ because everybody’s got to do it together. The second thing I’d say, though, is it’s clearly getting at don’t we need a stronger regulatory environment. The Tobin tax is serving as a proxy for ‘don’t we need tougher, tighter, more robust oversight.’ Obviously we do.

The United Kingdom already has such a tax and remains a center of the financial world, to answer Goolsbee’s first point. On the second, I’ll quote Dean Baker: “The economic collapse caused by Wall Street’s irrational exuberance has led to a huge increase in the country’s debt burden. It seems only fair that Wall Street bear the brunt of the clean-up costs.” And these clean-up costs would represent .2% of all stock-trading activity.

Of course, why come up with actual solutions when you can have “war bonds!”

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David Dayen

David Dayen