How do Democrats get their mojo back? Well, how about proposing a financial crisis responsibility fee of $90 billion to be levied on the nation’s largest banks and financial institutions and then waiting for the Republicans to fall on their face?
“This is the latest proposal in the Obama administration’s failed attempt to borrow, spend and tax their way into economic prosperity,” Rep. Jeb Hensarling (R-Texas) said earlier on Wednesday. “To think that banks will loan more money if you tax them is beyond economic ignorance.”
That message won’t even sell in Texas.
The $90 billion dollar figure was chosen because that’s the administration’s estimate of what will be the ultimate shortfall from the $700 billion bailout. So, we’ll get paid back $610 billion and assess a tax on the fat cats to get the rest of it back over the next decade.
Let the Republicans complain about that while they defend the banks.
Rolling out one or two of these a week won’t hurt either.
It is the right way to do it. And the details of how the tax will be applied is smart as well (see Jerome a Paris’s diary on Daily Kos). But I won’t be cheering until Congress actually passes it. Idle proposals don’t count any more for Democrats getting new mojo. No matter how much sense they make.
And, as Jerome argues, instituting the tax permanently will tend to make the banking/securities markets less subject to pursuing bubbles. We have had experience between FDR and the anti-FDR of a similar tax, and it worked well.
i submit that Obama can “propose” all the “financial crisis responsibility fees” he wants, but if the congress (owned by the banks, as durbin says) won’t pass them, it won’t mean shit. The article you link to doesn’t mention it, but the Washington Post reports that
I see a big risk if congress doesn’t pass it: it would make the president look weak and the congress look corrupt (but i repeat myself).
That’s why I get so tired of seeing “proposals” treated like accomplishments. you can tell me you proposed this thing or the other until you’re blue in the face, but unless there are actual results (ie, congress passes and the president signs legislation imposing a financial crisis responsibility fee) it’s just so much talk. Might as well propose a mission to Mars.
Do you think a bill like that could pass the House AND the Senate? With Tim Johnson likely to be heading finance?
Tim Johnson will be heading Banking, not Finance, and he’ll be doing that next year, after Dodd retires. But, I think it will be possible to pass the fee on banks. Other elements of reform may make the bill hard to pass, but that particular one shouldn’t be a big problem.
Of course if he didn’t propose it, and waited for Congress to craft its own proposal, Obama’d get bitched out for that, too.
I would turn down the job. Third string catchers make as much, there’s less work, less stress, and baseball Annies to chase…
don’t get me wrong: I’m not objecting to the proposal or slagging Obama for doing so. I’m objecting to the idea that a proposal is how the “Democrats get their mojo back”.
it’s a proposal, just like “a public option” was (well, that was more of a campaign promise, but same difference). Until it’s signed, sealed, delivered it’s nothing more than talk, which is notoriously cheap. heck, the president proved that himself when he said a few weeks ago, “I never campaigned on a public option.”
“Mojo” is derived from accomplishments, not promises.
yeah, I agree with you. Maybe I should have said “signing” rather than “proposing.”
I think getting the bill to Congress would qualify, no matter what the outcome.
Call me when any of this gets implemented. Maybe Obama will summon the bankers for their input and when none of them show up, in order to show “strength” he’ll pressure members of the House to tax more of the middle class – just like he’s doing now with the health care bill.
I would think Obama would get some credit for making Congress vote this up or down. But with some of us, that will never happen. What is so difficult about accepting that the president proposes, and Congress disposes?
I don’t know that Congress failing to pass it will make Obama look weak. Why won’t it make him look like a populist hero prodding a corrupt Congress? When I first heard this announced my first thought was, damn — I can’t wait to see the Republicans filibustering to keep the banksters from getting taxed on their stolen windfall. To my mind, it will almost be better if the bill DOES fail. Strange that those who bitched about how Obama doesn’t draw the battle lines now start bitching because he does.
How about the Democrats made an aggressive and sustained effort to sell it? Instead of letting the Repubs name the tune.
Okay. And how do we pay back the rest of the aid we’ve given them?
Good start. But 1) let’s see how it shakes 2) how hard Obama fights for it 3) what the followup is.
A step in the right direction.
Oops. Spoke too soon. It’s worse than it seems.
Jamie Kirchik: From Q4 2008 through Q2 2009, large banks had a funding cost that was 78 basis points1 lower than that of small banks….[So] the tax isn’t nearly big enough! It’s being calculated as 15 basis points of uninsured liabilities, calculated as assets minus Tier 1 capital minus insured deposits. 15 basis points is a lot less than 78 basis points. And if the FDIC cost of funds data are based on all liabilities (not just uninsured liabilities), then charging 15 basis points on uninsured liabilities only increases the overall cost of funds by about 7 basis points (at least in the administration’s example). This doesn’t come close to compensating for the TBTF subsidy.
Kevin Drum: The point of the tax shouldn’t simply be to pay back the cost of TARP, which is just a small part of what the government did to help out the banking sector in 2007-08. It should also be used to level the playing field. Big banks get funding at lower cost because they are, supposedly, safer than small banks. But guess what? That’s a mirage. They fail just like small banks, but they do so less often and get bailed out when it happens. So why give them an advantage that serves mainly to let them grow ever more gigantic? A properly designed tax — one that’s both bigger and more graduated, so that it goes up as banks get larger — would be a much better one. More here from Simon Johnson and Peter Boone.