President Obama is at it again -- pandering to rich and powerful political supporters while portraying himself the guardian of the exchequer and champion of the little guy.
The president says his proposed tax on the capital of the largest banks and financial institutions is intended to recoup the TARP money that has not or will not be repaid.
That is a flagrant attempt to confuse the public on two fronts.
First, the banks the president would tax are repaying their TARP money with interest to the Treasury. Though not all of the TARP money given to the banks has yet to come back, the government will get it all back with a significant profit because the government was paid such generous interest under the terms of the TARP.Second, the president misused the TARP money by investing in GM and Chrysler and GMAC (GJM), and that is where the government will lose money. If President Obama wants to tax anything to recoup lost TARP funds, it should be cars. However, that would anger the UAW, staunch supporters of the president and Democrats running for Congress. The bank tax is in response to public outrage over the $150 billion in bonuses paid in 2010 on 2009 bank earnings. The tax would only raise $9 billion in 2010 -- a pittance compared with the bonuses. Those bonuses were "earned" trading the $1.5 trillion the biggest banks were loaned by the Federal Reserve at near-zero interest rates. The bankers are screaming about a death wound when the tax is merely a paper cut.