Research Briefing

Obama Misleads On What New So-Called “Bank Fee” Will Do And Who Will Pay

OBAMA PROPOSING TAX ON BANKS TODAY, CLAIMING IT WILL “RECOUP” COST OF BAILING OUT THOSE BANKS

Obama To Propose Tax On Big Banks Today. “President Obama has decided to seek a tax on big banks to recoup up to $120 billion that the government expects to lose from bailing out the financial system, automakers and some troubled homeowners.” (Jackie Calmes, “Obama To Propose Bank Tax To Recoup Bailout Losses,” The New York Times, 1/12/10)

Obama Claims Goal Of Tax On “More Than 20 Of The Nation’s Largest Banks And Other Financial Companies … Is To Recoup The Taxpayer Cost Of TARP ...” (Mike Allen, “Politico Playbook,” Politico, 1/13/10)

BUT THESE BANKS ALREADY PAID BACK TAXPAYERS

But Nation’s Largest Banks Have Repaid TARP. “Wells Fargo & Co. and Citigroup Inc … both repaid their government aid, escaping heightened regulatory and public scrutiny. …With the actions by Wells Fargo and Citi, the nation’s four largest banks have returned their aid packages, as have several large regional banks. …J. P. Morgan Chase & Co., Goldman Sachs Group Inc., Morgan Stanley, Capital One Financial Corp., and BB&T Corp. were among the first to repay earlier this year.” (Matthias Rieker, “UPDATE: Wells Fargo and Citi Complete TARP Repayments,” The Wall Street Journal, 12/23/09)

And Government Made Profit From Bailout To Banks. “These were much larger than a $15 billion profit registered from the Capital Purchase Program for banks and $4.4 billion in profits from other bank investments, asset guarantee and lending programs.” (David Lawder, “AIG, Autos Offset Treasury Bank Bailout Profits,” Reuters, 1/11/10)

OBAMA’S “SAVINGS TAX” WOULD HIT “EVERY SINGLE CONSUMER,” HARM THE ECONOMY

Obama Claims Bank “Fee … Won’t Be Passed Along To Retail Customers.” (Mike Allen, “Politico Playbook,” Politico, 1/13/10)

But Tax Will Be Passed Onto Consumers Through Lower Interest Payments On Savings Accounts. SUZE ORMAN: “Every time we get involved and we impose fees on the banks and we do certain things, what do you think the banks do? … They pass those fees … down to the bottom line so that every single consumer ends up paying for those fees … Where do they renew those CDs today in order to get income to live? Not at a bank giving that’s giving them 1%. And why so little? They’re paying zero for that money …” (MSNBC’s “Morning Joe,” 1/12/10)

• SUZE ORMAN: Tax Would Hit “Every Single Taxpayer, Every Single Consumer, Every Single Person That Is Struggling Today To Just Get By.” (MSNBC’s “Morning Joe,” 1/12/10)

Tax Would Be Nearly Permanent As Obama “Settled On This Fee, To Be Spread Over As Many As 10 Years.” (Mike Allen, “Politico Playbook,” Politico, 1/13/10)

• Senior Banker Says Tax Will Be Passed Onto Bank Customers And Harm The Economy.  “One senior banker said: ‘The bottom line is that we have a bottom line. If our costs rise, we will charge people more. This levy idea could actually backfire and end up harming the economy and consumers.’” (Francesco Guerrera and Krishna Guha, “Outcry On Wall Street At ‘Absurd’ Levy Plan,” The Financial Times, 1/12/10)

“SAVINGS TAX” JUST ANOTHER OBAMA SCHEME TO PAY FOR MORE BINGE SPENDING

In Addition To “Savings Tax,” Obama Administration Supports Stock Transaction Tax. “Speaker Nancy Pelosi gave her strongest endorsement yet of a global financial transaction fee Thursday after raising the issue directly with Treasury Secretary Timothy Geithner in a conversation this week. ... But after their phone conversation Wednesday, Pelosi told colleagues that the secretary indicated he was more open to some such fee than had been reported.” (David Rogers, “Pelosi Pushes Global Financial Fee,” Politico, 12/3/09)

• Obama’s Fellow Dems Considering Medicare Tax On Investment.  “House and Senate negotiators are considering applying for the first time the Medicare payroll tax to investment income as part of a compromise to pay for a health overhaul. The extra Medicare tax would apply only to the wealthy and could allow congressional Democrats to reduce the sting of a tax on high-cost insurance plans, said Democratic aides and others briefed on the negotiations.” (Martin Vaughan And Laura Meckler, “Democrats Weigh New Tax On Investment Income,” The Wall Street Journal, 1/12/10)
• And Obama’s Economic Recovery Advisory Board Chair, Paul Volcker, Laying Groundwork For National Sales Tax. “My tax philosophy would be if we can’t deal with our expenditure loan with the present tax system, we’ve got to think about changing the tax system ... When you think about changing the tax system, given the problem that we started out talking about, you’ve got to talk about some tax that hits consumption.” (Henry J. Pulizzi, “Volcker: Carbon Tax VAT Should Be On Table If Cost Cuts Insufficient,” Dow Jones Newswires, 9/29/09)

All To Help Pay For Obama’s $2.5 Trillion Government-Run Health Care Experiment. Sen. Max Baucus (D-MT): “Just for a second -- health care reform, whether you use a ten-year number or when you start in 2010 or start in 2014, wherever you start at, so it is still either $1 trillion or it’s $2.5 trillion, depending on where you start...” (Sen. Max Baucus, Floor Remarks, 12/2/09)

• His $174 Billion Stimulus II. “The House narrowly passed Speaker Nancy Pelosi’s (D-Calif.) $174 billion jobs bill Wednesday, only after Pelosi and other party leaders yelled, pleaded and cajoled reluctant Democrats worried over deficit spending. The vote was 217-212. No Republicans voted for the bill, and 38 Democrats voted against it.” (Mike Soraghan and Jared Allen, “House Narrowly Passes Pelosi’s $174B Jobs Bill,” The Hill, 12/16/09)
• And His Record-Setting Deficit Spending. “The federal budget deficit was about $390 billion in the first quarter of fiscal year 2010, CBO estimates in its latest Monthly Budget Review--$56 billion more than for the same period in fiscal year 2009 despite reduced spending related to turmoil in the financial markets.” (Douglas W. Elmendorf, “CBO Estimates A Federal Budget Deficit Of $390 Billion For First Quarter Of Fiscal Year 2010,” Congressional Budget Office's “Director's Blog” Blog, 1/7/10)