Politicians agree that we need to invest in our transportation infrastructure, but ask any of them how we should pay for it and you’re likely to endure an uncomfortable silence. The problem is so bad that it seems to have derailed the new transportation bill until 2011.

There is at least one guy willing to offer a serious proposal though. Instead of taxing drivers more at the pump, says Peter DeFazio, why not make those finance guys that we all hate so much pay for it?

Specifically, the Democratic congressman from Oregon wants to impose a small tax–0.02%–on oil futures contracts.

From his office: “A transaction tax on crude oil securities will close the gap in funding a twenty-first century transportation system while lowering the price of oil.  This is a win/win,” DeFazio said.  “If we put off this transportation authorization, we will push off needed reform.  Every day we wait people will sit in traffic instead of spending time with their families, every day people are not as safe as they could be because of our crumbling infrastructure, every day our economy suffers when our products sit in traffic jams.  My proposal will not cost consumers one cent but will substantially increase our investment in our transportation infrastructure.”

Since oil futures are a multi-trillion dollar market, the numbers add up quickly even at such a low rate of taxation. DeFazio’s proposal would rebate the tax to good guys like railroads and airlines who buy futures to hedge against fluctuations in the price of crude and stick hedge funds and the like with the tab. According to DeFazio’s press release: “This proposal would rebate all transaction taxes paid by legitimate hedgers. Since the tax is on speculation only, it deters speculation and undermines much of the crude oil price bubble.”

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A clawback, as you probably know but many of your fellow Americans do not, is the repossession of a reward that should never have been bestowed in the first place. It’s something of buzzword these days since the financial wizards who gutted the world economy by selling lots of phony paper and taking on absurd risk are still very rich even while their firms are living on taxpayer money.

In televisionland, pundits tend to shake their head sadly and say it’s too late to do anything about the exorbitant bonuses paid out to Dick Fuld and his ilk. But if America is going to be the sort of country that can look itself in the mirror (so to speak) in coming years, that money needs to be clawed back. It’s arguably well within Congress’s power to do so, and it would probably be their most popular action in years. In the best of all worlds the seized loot would go into a special coffer and be spent on something optimistic and socially productive–something with symbolic value.

We’d like to suggest streetcars. They’re just fantastic–an aesthetically brilliant 19th century technology poised for a 21st century comeback. They reduce congestion and pollution and are potent investments in local revitalization. Portland, Oregon, spent $100 million on it’s streetcar network and reaped massive local economic benefits–more than $2.5 billion, according to some calculations. Little Rock has enjoyed similarly robust results. Under the shadow of the reckless newfangled “financial innovation” that laid our economy low, the streetcar speaks to a rather more sensible way of doing things. Not surprisingly, dozens of American cities want in on the action.

To kick the process off then, here are some suggested pairings of fallen financial titans and proposed streetcar projects they could fund with what’s left of their ill-gotten gains. So, come on, Congress – clawbacks for street cars. Ding, ding, ding!

CASE #1

Joe Cassano - While taking in at least $280 million in personal income since 2000 as the head of the AIG division that sunk the parent company, Cassano and friends have cost the taxpayer $120 billion and counting.

and

Robert Rubin - The mastermind behind Citibank’s risk strategy (as well as a key player in the Clinton administration decision to loosen essentially drop all regulation of financial derivatives) certainly has at least a $100 million he can kick in, even after his millions of shares in Citi have fallen into the low single digits.

Can buy streetcars for:

Tuscon - estimated cost of $70 million  (see artist’s rendition of this proposed line in the video below the jump)

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