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When I heard about Obama's plan to tax the banks, I immediately smelled a rat.  After the way he staffed his economic administration, and the way he failed to move on nationalizing the banks when the window of opportunity was there, I didn't believe he could be going after the banks in any serious way with this we're-getting-our-TARP-money-back-every-dime tax that he is calling for.  I immediately suspected that this tax would be a way of being able to cry populist without having to really BE populist.

And guess what?  None other than Ezra Klein, fierce advocate of the current health care bill, has called bullshit:

Good. The more I think on Obama's tax, the more it seems like an almost insulting proposal.

Obama's decision to sell this as a vicious attack on the banks seems like reverse-Tom Sawyerism: It's an effort to make everyone believe that this tax is really bad and tough, when it isn't. If anything, it's protecting the banks from a much more punitive tax that isn't limited to money they already have to repay.

Hello triangulation my old friend
We've come to talk with you again....

As Klein points out, demanding that the banks pay back the TARP money sooner than required is not even remotely tough, not even an eeensy-teensy-tiny little bit:

TARP repayment is a provision of the TARP law. Moving it up from 2013 to 2010 is not a grand populist maneuver. It's a change in timing. And given that the banks are pulling in record profits right now, it's a change in timing that actually fits their balance sheets.

Obama is making a big gift to the banks, as Klein points out:

The bigger problem, though, is conceptual: Confining the tax to repayment of TARP when we've got a massive budget deficit and when further stimulus spending is constrained because no one knows how to pay for it is, well, a huge gift to the banks. There's just no other way to put it.

Fortunately there are now some other strong proposals on the table:

Rep. Peter Welch (D-Vt.) introduced a bill Thursday that would impose a 50 percent tax on big bank bonuses and use the money for small-business lending; nearly two dozen lawmakers signed up as co-sponsors. Proposals already pending in the House include a 75 percent tax on bonuses and a new tax on all financial transactions. Meanwhile, House Financial Services Committee Chairman Rep. Barney Frank (D-Mass.), who favors the administration's proposal, is planning to hold hearings next week to consider additional measures.

Come on, President Obama.  Do the right thing for the people of the United States, not for the "Wall Street fatcats", as you call them.  We will know the difference.  And more importantly, we will feel the difference.  We're waiting.

Originally posted to andrewj54 on Sat Jan 16, 2010 at 02:37 PM PST.

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