Tax Reform and the Revolving Door

[Enrique]

President Obama wants a conversation on the tax code, but Wall Street's access to the administration rules out meaningful reform

http://www.guardian.co.uk/commentisfree/cifamerica/2010/dec/13/us-taxation-obama-administration

Last week, we learned that President Obama intends to push for comprehensive tax reform. We also learned that Peter Orszag, who until recently headed up the Office of Management and Budget (OMB), will be taking a top job at Citigroup. These two events may seem to have little in common, but unfortunately, they are intimately related.

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One item that has never featured prominently in public debate in Washington is a financial speculation tax or some equivalent tax on the financial industry. This is striking because it is potentially a source of a vast amount of revenue, more than $150bn a year by my calculation. The bulk of this money would come at the expense of the rents earned on Wall Street – an ample source, given the revenues now accruing to the big banks rescued by the bailout. This is the reason that even the IMF, an institution not known for being hostile to banks, now advocates new taxes on the financial sector.

Why do the folks in power in Washington seem unable or unwilling to consider a financial speculation tax? Let's imagine for a moment that, during his stint as OMB director, Peter Orszag had been a vocal advocate of financial speculation taxes. It doesn't seem likely that under these circumstances, Citigroup would currently be offering him a job that, according to the New York Times, would typically pay $2 to $3m a year.

Orszag and others in a similar situation undoubtedly understand how the positions they take in their roles in government can affect their future career options. Since many of these officials cannot fail to be conscious of the lure of such huge paychecks (that is, they take the jobs), it is reasonable to infer that the prospect of big-paying jobs on Wall Street and elsewhere affects the positions they advocate in the Obama administration and Congress.

In other words, President Obama is not being truthful: not everything is on the table. The items that matter most to the rich and powerful will not be called into question because their interests are being protected. As for the rest of us – as President Obama often said on the campaign, "you're on your own."