Addressing Climate Change While Preventing Financial Meltdown
What if the United States could reduce global disease, mitigate the impacts of climate change, help working families and children at home, and prevent risky Wall Street speculation all with one simple policy? A bill recently introduced by US Representative Pete Stark (D-CA) could accomplish just that if passed into law. Starkâs Investing in Our Future Act would place a minuscule fee on certain Wall Street transactions that increase the risk of financial meltdown, and use revenue generated to address some of the worldâs most pressing social and environmental problems.
As written by Rep Stark, the Investing in Our Future Act would place a 0.005 percent tax on currency transactions where Wall Street speculators convert one form of currency to another. According to Stark four trillion dollarsâ worth of such transactions occur every day, largely as a result of big banks gambling they can make money by converting to a different currency they believe is rising in value. Such transactions contribute little or nothing to the broader economy, while making financial markets less stable. Starkâs proposed fee, while very small, would still help reduce the number of Wall Street betting games. The resulting revenue would be directed to mitigate the effects of climate change and contribute to global health.
Forty percent of tax revenue from the Investing in Our Future Act would go to the United Nations fund that helps poor countries adapt to the increasingly tangible effects of climate change and reduce their dependence on fossil fuels. This could translate to millions or billions of dollars directed toward creating resilient agricultural systems, implementing clean energy projects in the developing world that eliminate need for polluting power plants, and facilitating migration of communities away from areas soon to be flooded by rising sea levels. The Investing in Our Future Act quickly drew praise from environmental groups like Friends of the Earth, who heralded the bill as a chance for the US to fulfill its responsibility to mitigate the effects and causes of climate change.
In addition to climate change-related aid, forty percent of the money from the proposed Wall Street fee would be dedicated to fighting global diseases like AIDS and malaria. The remaining 20 percent would help working families in the US find affordable childcare. All this would be accomplished without taxing ordinary Americans who convert currencies when travelling to another country. The conversion fee would apply only to transactions dealing with $10,000 or more, thus targeting mainly big banks involved in speculation.
The Investing in Our Future Act has a long way to go before it could be passed into law. It would need to navigate not only the US House of Representatives, where it has been introduced by Rep Stark, but also the US Senate. In the Senate, policies that include the word âtaxâ are routinely blocked from moving forward by Republicans and conservative Democrats, even if they target banking giants who contributed to the worst financial meltdown in recent US history. So donât expect to see the great ideas in this bill become law tomorrow. All the same itâs encouraging that forward-thinking members of Congress, like Rep Pete Stark, are at least attempting to move this kind of progressive policy forward.
What do you think about this issue? How could a tiny tax on Wall Street help address the effects of climate change and other urgent world problems?
Photo credit: NASA Goddard's Scientific Visualization Studio
Nick Engelfried is a freelance writier on climate and energy issues, and works with campuses and communities in the Pacific Northwest to reduce the causes of climate change.