President Obama is proposing a new tax to collect $90 billion over 10 years from 50 financial institutions he said helped trigger the recession. Obama said that — now that large banks are profitable and Wall Street firms are rewarding workers with huge bonuses — the companies are healthy enough to reimburse the government for its bailouts. "We want our money back and we're going to get it," Obama said. Is it only fair for Obama to want rescued banks to give something back, or will a new tax only weaken banks as they struggle to recover? (Watch a report about Obama's new tax on banks)
Obama's right to tell banks to pay: "The banks, of course, say 'no fair,'" says Peter Cohan in Daily Finance. "But I disagree." The banks will argue that they've paid back their bailouts, and that the $117 billion the government expects to lose on the Troubled Assets Recovery Plan is mainly due to costly government investments in General Motors, Chrysler, and insurer American International Group. But "Wall Street is the primary culprit for the financial crisis and should pick up these losses."
"Why Obama's $90 billion bank tax is fair play"
Attacking banks will only hurt the recovery: "Bank bashing has always been an easy sport for demagogues, ideological rogues, and politicians," says Terence Corcoran in Canada's National Post. But what "the bashers" fail to realize or admit is that they are inflicting "collateral damage" on "the innocent and on the general economy." President Obama is just providing 90 billion more reasons not to invest in banks, and that will only make it harder for the economy to recover.
"More strikes against U.S. economy"
This isn't just about payback: President Obama's "financial crisis responsibility fee" isn't just about getting the TARP money back, says Jonathan Chait in The New Republic. As policy, the tax should discourage huge banks from taking irresponsible risks by "reducing the benefit of being 'too big to fail.'" As politics, it should go a long way toward restoring the public's confidence that the government is not on the "side of the Wall Street bad guys."
"Obama's new bank tax"
Just wait until banks pass on the cost to the public: This tax is "populism straight out of Frank Capra's 'It's a Wonderful Life,'" says the Associated Press' Jim Kuhnhenn. Rank-and-file liberals in Congress "cheered" it, but they and the public might have second thoughts if the banks "simply pass on the costs of the tax to consumers, drying up lending even further and hurting cash-strapped small businesses." That's one reason Republicans don't like the idea, and why Congress might not pass it.
"Analysis: Obama playing banks against taxpayers"
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
- The real story behind Deliver Us From Evil
- 43 TV shows to watch in 2014
- How the South's ugly racial history is haunting ObamaCare
- If Democrats abandon immigration reform after Tuesday's likely loss, they will turn 2016 into a debacle
- What if Leo Strauss was right?
- How to be the most productive person in your office — and still get home by 5:30 p.m.
- Feast your eyes on this beautiful linguistic family tree
- What is Molly? Everything you need to know about the party drug
- The real story behind The Conjuring and four other horror movies 'based on a true story'
- Stop making fun of philosophy and read some philosophy
Subscribe to the Week