Another Look at Obama’s Proposed Bank Tax « The Washington Independent
The tax on the nation’s bailed-out banks, proposed by President Obama last week, has won the support of congressional liberals, and even some conservative commentators have jumped on board. But don’t try to convince Peter Morici. The University of Maryland business professor (and prominent voice on Capitol Hill) is maintaining that not only is the tax so insignificant as to be “meaningless,” but it targets the wrong industry. The proposed 0.15-percent tax on the largest bailed-out banks — estimated to raise $90 billion over the next decade — is “a flagrant attempt to confuse the public,” Morici wrote over the weekend.
First, the banks the president would tax are repaying their TARP money with interest to the Treasury. Though not all of the TARP money given to the banks has yet to come back, the government will get it all back with a significant profit because the government was paid such generous interest under the terms of the TARP.
Second, the president misused the TARP money by investing in GM and Chrysler, and GMAC, and that is where the government will lose money.
If anything should be taxed, Morici continues, “it should be cars” — a proposal that would surely inspire screams of protest from a key Democratic constituency: the autoworkers union. So in the name of taking on industry, Morici argues, the White House is really just coddling it.
The proposed bank tax is meaninglessly small, serves no purpose toward reforming the banks, and is merely an attempt by the president to appear on the side of the auto industry and against the banks, when he is really on the side of union organizers and the bankers.
Morici may not have reason to worry. In this political environment, in which even the seat of the late Sen. Edward Kennedy (D-Mass.) is up for grabs, the Democrats might just lose their appetite for taking on the finance industry before the mid-terms. Indeed, there are already signs that that’s the case.