Obama To Push Tax On Being 'Too Big To Fail'

[laughingliberal]

President Obama will unveil on Thursday a proposed levy on the nation's biggest financial firms structured not just to repay taxpayers for the bank bailout, but to recoup some of the public subsidy that "too big to fail" banks have enjoyed on account of their implicit government backstop, a senior administration official tells the Huffington Post.

This would be by far the government's most assertive step in starting to claw back some of the enormous profits the TBTF banks have reaped, first as a result of the bailout and then from the implicit guarantee that the government would back up the debt of major banks if they ever faced bankruptcy.

Because these banks effectively have the full backing of the American government, they are able to borrow at much lower rates than banks that have to borrow based on their own credit-worthiness.

The administration official tells HuffPost that the planned tax would be imposed in a way that targets firms' riskiest activities, such as proprietary trading. It would be crafted in a way that doesn't affect a financial company's retail banking, so that the cost theoretically would not be passed on to retail customers -- but it wasn't clear exactly how that would work.

http://www.huffingtonpost.com/2010/01/13/too-big-to-fail-tax-obama_n_420358.html

So, this looks like a step in the right (and by 'right' I mean correct) direction. Can it get through the House and Senate without being loopholed to death? I am starting to think the White House might actually have decided the 'left' was worth some consideration. I know I talked at length to the gentleman on the comment line the other day about the President's abandonment of the liberal wing of the party, Perhaps they have received many calls like that, lately. It would seem so.

[laughingliberal]

1. Kick for a good idea I hope gets done nt

[uponit7771]

2. But Obama didn't save Bambi so....well yuo know ...../sarcasm (yes, it needs to be said around here)

[Union Yes]

3. This thread needs more love. C'mon DU! I support and commend the President for this.

:patriot:

knr

[ProfessorGAC]

4. I Heartily Approve Of This Idea

You pay for the privilege of having the gov't at your back. Want their protection? Pay for it. This may actually have the effect of some mergers being set aside to avoid this tax, which is also just fine. Then we end up with fewer "too big to fail" situations.
GAC

[Union Yes]

5. AM kick. nt

[ShortnFiery]

6. Yeah, and Obama favored a robust PO too. I'll believe it when it's actually LAW.

However, before then, it's all just "happy talk."

[laughingliberal]

8. He did in the campaign but, once in office, he never spoke forcefully for it

We'll see what happens. I see this a different because he is in office and he is the one making the proposal.

edited typo in headline

[Mari333]

10. yep

[WeDidIt]

7. Levying a tax is a brilliant move

First off, Republicans can't vote for it. They never met a tax they could vote for.

so in the mid terms, Democrats will be able to say of incumbent Republicans, "They opposed holding companies that are too big to fail accountable"

[laughingliberal]

9. +1 nt

[Selatius]

11. If you don't want the bank to pass on the cost of the tax to consumers, make it a tax on income.

An income tax, by its very nature, cannot be passed onto consumers simply because it is not a tax on production.

[zaj]

12. Sounds like a great policy...

... but if they are counting on this for a political bump, I don't see how they get it. It's going to be very muddy and unclear. That means that the Reps will define this as some evil and the Dems will be chasing their tail trying to defend against the attacks.

If history holds.

[laughingliberal]

13. Maybe he's doing it cause it's the right thing to do.

I, personally, think a lot of the public would welcome finding a way to get the 'fat cats' to carry more of their share of the burden. The Republicans will, of course, paint it as a tax on bidness and bring out that old saw about it destroying jobs, blah, blah, blah. The easy answer is there have been no jobs created while we weren't taxing them, no lending to small business, no nothing that helped Main Street. It also plays very well with the liberal wing of the party who they are in danger of losing for the midterms.