Believe In The Magic That Can Set You Free-- Bernie!

In a few hours Bernie Sanders will officially kick off his presidential campaign back home in Burlington. Virtually no one in the political universe thinks he has a chance to beat Hillary Clinton to win the Democratic primary. Unless... and there are a lot of possibilities that could open up the race in an unexpected way. Wikipedia has a page dedicated to the endorsements for the Democratic Party primaries, 2016. Nearly the entire page is made up of people and organizations backing Hillary Clinton-- including progressive icons like Howard Dean, Al Franken, Tammy Baldwin, Raul Grijalva, John Lewis, Judy Chu, Ted Lieu and Mike Honda. Celebrities include Robert De Niro, Elton John, Lady Gaga, Bill Maher, George Clooney, Beyoncé, Barbra Stresiand, Dustin Hoffman, Nicolas Sarkozy, Chris Rock, Sharon Osbourne, RuPaul and... Nevada's Moonlite BunnyRanch. Bernie's endorsers may not have the pizzazz of a RuPaul, but they are trusted communicators-- like Thom Hartmann, Ed Schultz, and Bill Press-- and political activists-- like Ben and Jerry, the founders of Ben and Jerry's, Jody Evans (founder of CODEPINK), Bill McKibben, Marianne Williamson, Matt Taibbi, Mark Ruffalo, and John Nichols.

The Associated Press ran an article yesterday asserting that Bernie "is laying out an agenda in step with the party’s progressive wing and compatible with Warren’s platform-- reining in Wall Street banks, tackling college debt and creating a government-financed infrastructure jobs programme." It isn't untrue but it misses the point: Bernie has been creating that agenda and platform for many decades. He's not trying to fit a mold. The mold is largely modeled on him. Sanders was founding the Congressional Progressive Caucus long before you had ever heard of Elizabeth Warren, unless you took one of her classes at Harvard. But this is how the media frames the story:

Whether Sanders can tap into the party’s Warren wing and influence Clinton’s policy agenda remains unclear. But he has been on the forefront of liberal causes as Clinton has seemed to be tacking to the left.

Clinton regularly refers to an economic deck stacked against American workers-- rhetoric that offers comparisons to Warren’s frequent description of the economic system being “rigged” against middle-class families.

Sanders has joined with Warren to drive opposition to the Trans-Pacific Partnership trade proposal, arguing it would ship jobs overseas. Clinton has avoided taking a specific position on the trade deal.

The Vermont senator has introduced legislation to make tuition free at public colleges and universities, a major piece of Warren’s agenda. The free tuition would be covered by a mix of state and federal money and paid for by higher taxes on Wall Street investment firms, hedge funds and other financial transactions. Clinton’s campaign has signalled that she intends to make debt-free college a major piece of her campaign.

But not all of Bernie's ideas are easy for Hillary to even mouth. Yesterday, writing for Truthout, Dean Baker used one-- the Robin Hood tax-- to demonstrate why many grassroots progressives so fervently prefer Bernie to Hillary.

Last week Bernie Sanders, the Senator from Vermont and only announced challenger to Hillary Clinton for the Democratic nomination, took a strong stand for everyday people. He proposed a financial transactions tax (FTT), effectively a Wall Street sales tax, and to use the revenue to make public colleges tuition free.

While making college affordable to low and middle income families is important, the proposal for an FTT is a real game changer. There is no single policy that would have anywhere near as much impact in reforming the financial sector. A FTT would effectively impose a sales tax on stocks and other financial assets, so that speculators have to pay a tax on their trades, just like people who buy shoes or clothes.

There are three points people should understand about a FTT. The first is that it can raise an enormous amount of money. A FTT could be imposed at different rates. Sanders proposed following the rate structure in a bill put forward by Minneapolis Congressman Keith Ellison. Eleven countries in the European Union are working to implement a set of FTTs that would tax stock trades at a rate of 0.1 percent and trades of most derivative instruments at the rate of 0.01 percent.

Extrapolating from a recent analysis of the European proposal, a comparable tax in the United States would raise more than $130 billion a year or more than $1.5 trillion over the next decade. This is real money; it dwarfs the sums that have dominated most budget debates in recent years. For example, the Republicans had been trying to push through cuts to the food stamp program of $40 billion over the course of a decade. The sum that can be raised by this FTT proposal is more than thirty times as large. The revenue from a FTT could go far toward rebuilding the infrastructure, improving the health care system, or paying for college tuition, as suggested by Senator Sanders.

The second point is that Wall Street will bear almost the entire cost of the tax. The financial industry is surely already paying for studies showing the tax will wipe out the 401(k)s held by middle income families. This is nonsense. Not only is the size of the tax small for anyone not flipping stock on a daily basis, research indicates that most investors will largely offset the cost of the tax by trading less.

Most research shows that trading volume falls roughly in proportion to the increase in transaction costs. This means that if a FTT doubles the cost of trading then the volume of trading will fall by roughly 50 percent, leaving total trading costs unchanged. Investors will pay twice as much on each trade, but have half as many trades. Since investors don’t on average make money on trades (one side might win, but the other loses), this is a wash for the investor.

While most middle income people don’t directly trade the money in their retirement accounts, they do have people who manage these funds. The research means that the fund managers will reduce their trading, so that the total costs of transactions that are passed on to the investor remain roughly constant. This means that the financial industry will bear almost the entire cost of the tax in the form of reduced trading volume.

This gets to the last point: a smaller financial industry is a more efficient financial industry. The purpose of the financial industry is to allocate money from savers to companies that want to finance new investment. As the industry has exploded in size over the last four decades there is no reason to believe that it has gotten better in serving this basic function. In fact, the stock bubble at the end of the 1990s and the housing bubble in the last decade might suggest that it has gotten worse.

A study from the Bank of International Settlements and more recent research from the International Monetary Fund find that a bloated financial sector slows growth. An oversized financial sector pulls resources away from more productive sectors of the economy. People who could be engaged in biological research or developing clean technologies are instead employed on Wall Street designing computer programs to beat other traders by a microsecond to garner profits at their expense. A FTT will make much of this activity unprofitable, encouraging people to turn to more productive work.

That's bold leadership, not tepid political calculation. And it's why Blue America is helping Bernie raise funds for his campaign. Please consider helping here. This week, writing for Mother Jones, Kevin Drum shared some fascinating research into the political complexion of our country these days. "A pair of grad students," he wrote, "surveyed 2,000 state legislators and asked them what they thought their constituents believed on several hot button issues. They then compared the results to actual estimates from each district derived from national surveys."

Everyone-- both liberal and conservative legislators-- thought their districts were more conservative than they really were. For example, in districts where 60 percent of the constituents supported universal health care, liberal legislators estimated the number at about 50 percent. Conservative legislators were even further off: they estimated the number at about 35 percent.

Why is this so? The authors don't really try to guess, though they do note that legislators don't seem to learn anything from elections. The original survey had been conducted in August, and a follow-up survey conducted after elections in November produced the same result.

My own guess would be that conservatives and conservatism simply have a higher profile these days. Between Fox News and the rise of the tea party and (in the case of universal health care) the relentless jihad of Washington conservatives, it's only natural to think that America-- as well as one's own district-- is more conservative than it really is. But that's just a guess. What's yours?

The platform that Bernie Sanders is running on is very much what Americans believe in, and the direction he wants to move the country in is the direction most people want to see the country move in. It's a shame we have an electoral system designed to minimize all that. Want to help? Blue America has a page for that.