House Democrats Peter DeFazio of Oregon and Ed Perlmutter of Colorado are readying a bill under which "the sale and purchase of financial instruments such as stocks, options, derivatives and futures would face a 0.25 percent tax," the Hill reports. The paper says that half of the $150 billion in tax revenue raised would go toward reducing the deficit, while the other half would be spent on things such as highways with the aim of creating jobs. The legislation is called the "Let Wall Street Pay for the Restoration of Main Street Act of 2009." Notice that the tax as described would not apply to Treasury Bills or to municipal bonds. George Melloan had a piece in yesterday's Wall Street Journal noticing the way that the Federal Reserve is forcing banks to buy more T-Bills in the name of reducing risk, describing it as "feeding the government and starving free enterprise." The interest on government bonds is already tax-exempt; imposing the DeFazio-Perlmutter tax would even further tilt the playing field for investors away from investing in the equity of private companies and toward enabling federal, state, and local government debt-financed spending. The politicians, in other words, are readying a tax that will make it even easier for them to borrow and spend. The Hill article says that Speaker Pelosi "said such a move would need to be done in conjunction with efforts in other countries." At least she realizes that otherwise, the tax would just force trading activities that now take place in New York to move overseas, making the $150 billion revenue estimate an overly optimistic one.