Research

Back in January, President Obama introduced his so-called “financial crisis responsibility fee” in a desperate populist attempt to attack and punish banks. So Sen. Chuck Grassley (R-IA) asked the CBO to do an analysis of the proposal to see if Obama’s rhetoric held up to reality. Unsurprisingly, it didn’t.

RHETORIC: Obama argued that this so-called fee would “be imposed on major financial firms until the American people are fully compensated for the extraordinary assistance they provided to Wall Street.”

• REALITY: CBO says the banks paying the tax “would not be those that are directly responsible for losses realized by the Troubled Asset Relief Program.”

RHETORIC: Obama argued that this so-called fee “won’t be passed along to retail customers.”

• REALITY: CBO says the “cost of the proposed fee would ultimately be borne to varying degrees by an institution’s customers, employees, and investors …”

RHETORIC: At the same time Obama was pushing this tax, he was also prodding them to “provide small businesses with needed loans.”

• REALITY: CBO says that the tax could “slightly decrease the availability of credit for small businesses.”

CBO has confirmed what we’ve known all along: Obama’s savings tax will hurt customers and businesses, and has nothing to do with recouping losses from TARP. Politico’s “Morning Money” summed it up best:

The bank tax sounded like great politics at the time – punishing big players who arguably caused the financial crisis and are now back to minting money – but this analysis suggesting it will really just punish consumers and politically sacrosanct small businesses could provide a very powerful, perhaps fatal, counterargument.