There was some good news out of Washington yesterday for a change. The President hosted a high-profile summit on jobs and Congress started work on a Wall Street speculation tax to help pay for a new jobs bill.

Led by Oregon Representative Pete DeFazio and Iowa Senator Tom Harkin, a group of lawmakers introduced a measure sure to drive Wall Street crazy.

The bill aptly titled “Let Wall Street Pay for the Restoration of Main Street Act” would tax futures contracts, swaps and credit default swaps at a rate of 0.02 percent and stock transactions at 0.25 percent. The beauty of the idea is that it effectively targets Wall Street speculators whose hot money trading on commodities like gas and food jacks up the prices for the rest of us.

The cries from Wall Street were audible as CEOs envisioned some portion of their estimated $140 billion bonus package shrinking.

“It will kill jobs!” Well, Wall Street has done a pretty good job of that already. 16 million Americans are currently looking for work and millions more can’t make ends meet with the jobs they do have. Moreover, none other than the President’s chief economic adviser, Larry Summers, has noted in the past that ”the efficiency benefits derived from curbing speculation are likely to exceed any costs of reduced liquidity or increased costs of capital.”

“Grannie will be hurt the most!” In truth, the levy will have little impact on small investors or pension funds because they hold their investments for the long-term, but it does disincentivize high-volume short-term speculative trading. Just to be safe the author’s carve out middle class investment vehicles.

“We will move from New York to London!” Well, go ahead. Great Britain currently levies a transaction tax that his higher than the one proposed and Prime Minister Gordon Brown recently joined European leaders in calling for a global transaction tax. Summers argued that Britain’s experience showed that the tax could be levied domestically “without crippling the competitiveness of the U.S. financial markets.”

The bill would earmark the funds for job creation, a hot topic on the hill as Democrats face down a 10 percent unemployment rate and mounting foreclosures. House Speaker Nancy Peolosi said the proposed tax on financial transactions "has a great deal of merit." “It is really a source of revenue that has really minimal impact on the transaction but a tremendous impact on helping us meet our needs," Pelosi said at a news conference.

Speculative trading on Wall Street has little economic or social value, it is the opposite of productive economic activity. If the big banks were just gambling with their own money, it might not matter so much, but now many of them are gambling with the implicit backing of the taxpayer.

Following their $700 billion bailout, Wall Street is now enjoying a resurgence in profits and bonuses, but they are refusing to lend to small businesses. I am with Larry Summers, and 200 other economists [3]. It’s time to put a damper on the casino and put Wall Street to work for Main Street.