"We want our money back"
An Obama proposal that's good policy and good politics
"We want our money back"
Dick Polman, Inquirer National Political Columnist
President Obama's newly proposed bank tax - or, in his parlance, "a financial crisis responsibility fee" that would target the ravenous buccaneers who plundered the economy and nearly plunged us into a second Great Depression - is a shrewd blend of good policy and good politics. But whether Congress will actually enact such a levy...well, that's another story entirely, for reasons that are all too familiar.
On the policy front, Obama's levy would be a boon to beleaguered taxpayers, who put up the money to bail out the most reckless financial firms. Under the law that mandated the rescue operation, the feds are required to recoup that bailout money for the taxpayers, post-rescue. At the moment, that tab is roughly $117 billion. Obama wants to slap his tax on 50 of the largest financial firms, and recoup that money over the next decade.
Obama's timing is hardly accidental. Starting today, the largest firms are expected to report their annual profits, as well as their plans to pay out fat employee bonuses - a veritable celebration of the recovery that was financed by the taxpayers in the first place. (Capitalists actually adore "socialism," as long as they're the ones who are feeding at the trough.) As the president put it yesterday, "We want our money back, and we're going to get it. If these companies are in good enough shape to afford massive bonuses, they are surely in good enough shape to pay back every cent they received from taxpayers."
And on the political front, Obama's tax can potentially erase the perception (widely held by his liberal base and many swing-voting independents) that he's too cozy with Wall Street. With the '10 congressional elections on the horizon, he needs to harness the populist fury at Wall Street, lest he and his party be consumed by it. Yesterday's sound bite - "we want our money back" - is intended to signal that he's on the side of the little guy.
And the tax is also intended to expose the Republicans as Wall Street toadies who are on the side of the heavy hitters. For many months, GOP lawmakers and messengers have been rhetorically fulminating about Wall Street abuses and about the fleecing of the taxpayer. But now that Obama has pitched a plan that would actually recoup $117 billion for the taxpayers, guess what...and brace yourself, because I know this will come as a shock...the Republicans are against it.
Their arguments are basically what you would expect to hear. A Texas congressman charged yesterday, "To think that banks will loan more money if you tax them more is fundamental economic ignorance. It is small wonder the nation remains mired in double-digit unemployment under such policies." And the Republican line was echoed, predictably enough, by the chief executive of J P. Morgan Chase, who said, "Using tax policy to punish people is a bad idea," and who warned that "all businesses tend to pass their costs on to their customers."
So let us review: Taking full advantage of government deregulation, the top financial firms wreaked havoc by turning the economy into an unsustainable Ponzi scheme - yet now that they've been rescued by the American taxpayers (whom they screwed in the first place), they want to keep that taxpayer money, on the grounds that it would be "a bad idea" for the government to take it back. And the Republicans are right in step with that thinking.
The Democrats therefore have a rhetorical opportunity. In these early days of congressional election campaigning, they can tag the GOP as the party that stands with Wall Street against the taxpayers (as in, "the Republicans don't want you to get your money back"). Indeed, if this tax proposal does come up for a vote on Capitol Hill, the Senate Republicans will probably stand in united opposition and threaten yet another filibuster. That's legislative life as we know it.
Naturally, the financial industry is also girding to fight such a fee - as Obama acknowledged yesterday, when he directed these harsh words at Wall Street: "Instead of sending a phalanx if lobbyists to fight this proposal, or employing an army of lawyers and accountants to evade the fee, I suggest you might want to simply meet your responsibilities."
Care to lay odds on that happening? Far more likely, the financial industry will marshal their Republican enablers and pick off a few conservative Democrats to stymie the fee in the Senate.
Obama's move yesterday was good politics, but, once again, yet again, his tongue-lashing rhetoric may well collide with the realities of power. Because the titans of Wall Street have long demonstrated that, when it comes to playing the inside game, they have no shame.
Comment removed.
TOM READ THIS post by CD75: Also, will this stimulate more lending? (Answer: No). In it is 1937 all over. ........................FDR!!— Talvenada- Posted 12:27 PM, 01/15/2010 CD75 Does Obama have a clue where the banks will pass the tax too? (Answer: their customers). Also, will this stimulate more lending? (Answer: No). In it is 1937 all over.— Talvenada
- What happened to Dick's hit piece on Massachusetts' next junior Senator? Maybe someone with a little journalistic integrity had it taken down?— tr88
- TOM: The blame is clear. It's on Obama & FDR, and not Bush 43 & Hoover!— Talvenada
- Comment removed.
- NEPhilly: forwarded from last blog ..just catching up with ya ... i think the Obama press out in the Hinterlands has clouded your evaluative skills. I would say that Obama resembles more the Bush model than the Crazy-Arse Leftist strawman that plays out in the Echo Chamber. 1) re: Iraq/Afghan, Obama is Bush on steroids ... Obama has taken these ACTIONS to fight terrorists in the past year: continued the Iraq War Plan of Bush-Petraus, a refocus on the Afghanistan that Bush forgot about -- he's sending in 30K+ additional troops, counting contractors we will have 100K+ armed forces in-country, accelerated Predator attacks in Pakistan, increased anti-terrorist activity in Yemen. not exactly the battle of words that the Right Wing Echo Chamber parrots out there ... 2) re: the Economy ... are you aware that Obama is perpetuating the Bush Domestic Economy Initiative of 2008. in his FINAL YEAR as president, the wild reckless Bush $pending culminated with these government programs: 1) Stimulus ($600 taxpayer rebates, 2/2008) $168 Billion; 2) Fannie Mae, Freddy Mac bailout $400 Billion; 3) A.I.G. bailout $150 Billion; Financial Bailout (TARP 1) $700 Billion. Let me repeat: Bush in JUST HIS LAST YEAR IN OFFICE TALLIED $1.418 Trillion in spending. Bottomline, the Bush economic mantra was: Socialize the losses and Privatize the gains. so who is in bed with Wall St and the Banks? ... 3) re: airline bombers ... are you aware that the Dec 25th UndieBomber is being treated the same way that George W. Bush treated the ShoeBomber – yep, as a criminal in US courts? ... as you can clearly see, Obama is alot closer to your Friend-in-Chief Bush in actual practice that it truly astounds me that You & Yours are so inflamed with Obama. makes one wonder WHY The Right Wing uproar aimed at the new kid on the block who is basically the previous kid but happens to wear the Other Team's uniform and has a funny sounding al-Qaeda name, and don't get me started on the ears ,,,,— jimy_max
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- As I see Tal potus ar history challenged, Hoover in 1930, like Obama now, went to far and passed the Smoot bill during the depression. This caused the depression to become worse. Also FDR raised taxes in 1936-1937 which caused the depression to become worse. Those who are ignorant of history are doomed to repeat it.— CD75
- Potushead: Do not be so naive. The executives always get paid and will always pay themselves. Taxing the company to the end of it will not stop that. All Obama is doing is raising the costs of lending on everyone else.— CD75
- NEPhilly: "I bet they are champing at the bit to start lending again now". Let's bo back to some basic economics. The banks to be taxed benefitted from TARP, either directly, indirectly, or both. The same banks are now making healthy profits. I agree that this tax will of course not cause them to lend more. Please explain to me how it will cause them to lend less? Their profits (and huge benefits) are paid out of money that they have ALREADY decided not to loan out (otherwise it would not be profit). Is your argument that is a bank that must pay, say, $1B back will loan out $1B less? They would then be reducing their profits - and their bonuses. OR, they could pass it on to consumers through higher rates and/or fees - which would make them less competetive aginst the small and mid-size institutions. That would be a good thing, as well as ... lowering their profits and bonuses. Seems like either way, they can't hurt the consumers without hurting themselves more— still_independent
- jimy, 1) I have supported & applauded the President on his surge into Afghanistan. 2) The economy now is a wasteland of liberal economic theory & only those horrible 'tax cuts' will fix it, imho:) 3) Bush couldn't spend one red nickle without this spendthrift, corrupt congress (w/Obama) approving it for TARP, etc.. The congress ran Fannie/Freddie into the ground when it was their job to regulate them & asked repeatedly by GWB to do so. The shoe bomber was arrested so close to 9/11 that the military & the Bush admin thought it would be better to take the military off the hook as they had other things on their mind (they were wrong). And if Pres. Obama is sooo close to GWB in all his actions why are you not more upset with him?— NEPhilly
- still, the govt. shouldn't change the rules half way through the game or after the game is over. It is just basic common sense, something surely lacking in Wash DC. I don't like the banks making huge profits or handing out big bonus', but they played by the rules and now should reap the benefit without retroactive & selective penalties. It is getting to be like Venezuela around here. And the perception that if you are too successful that this govt. will come in and take your profits is not an environment that is conducive to hiring, imho. I say bust these huge financial companies up (using anti-trust laws) into tiny little job creating entities and when they get in trouble next time, let them go bankrupt.— NEPhilly
- NEPhilly : I don't necessarily disagree with your 2:08 post. I just don't buy the "this will kill the economy" argument. The fairness is a separate discussion (although I have NO sympathy for the institutions that took TARP money - I seriously doubt they thought that there were no strings attached).— still_independent
- WAD: Is there any president who has done a good job in your lifetime? I'll blame Bush for what Bush did, and blame Obama for what he does. I'll blame whoever did or did not do right by the people. I'm old fashioned, and I don't buy this rules-by-the-rich-to-benefit-the-rich nonsense.— Talvenada
Cited by the Columbia Journalism Review as one of the nation's top political reporters, and lauded by the ABC News political website as "one of the finest political journalists of his generation," Dick Polman is a national political columnist at the Philadelphia Inquirer. He is on the full-time faculty at the University of Pennsylvania, as "writer in residence." Dick has been a frequent guest on C-Span, MSNBC, CNN, NPR and the BBC. He covered the 1992, 1996, 2000, and 2004 presidential campaigns.
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