Publish date:

Banks Get Tax Break Now

For Citigroup, that means an additional $38 billion in tax deductions to help it pay the Treasury the $20 billion it owes the TARP.

The Internal Revenue Service is suspending tax rules for Citigroup (C) - Get Report and other TARP recipients to permit those companies to more rapidly pay back the Treasury what they owe in TARP loans and to their boost stock prices.

For Citigroup, that means an additional $38 billion in tax deductions to help the beleaguered company pay the Treasury the $20 billion it owes the TARP. In addition, these breaks will juice Citigroup and other TARP recipients' stock values, and make TARP's huge equity positions more valuable.

At General Motors, the value of Treasury stock may never equal what the TARP paid for it, and juicing stock prices in this manner serves to make the bad and ill-conceived investments at Citigroup, GM and others, approved by Treasury Secretary Timothy Geithner and President Barack Obama, look better than they are.

As the IRS and TARP both are part of the Treasury, Geithner is giving away taxpayer money to preserve his own tainted reputation and cover up President Obama's bad bets and payoffs to their Wall Street pals.

The president continues to talk tough about bank bonuses, but at his recent meeting with the big bank CEOs, he did not float the idea of taxing undeserved bank bonuses, as the British prime minister is imposing for similar abuses.

TheStreet Recommends

Instead, the president encouraged bankers to better explain to the public why bank executives deserve the $140 billion in bonuses they "earned" using extraordinary government aid to dig out of a crisis they created.

Meanwhile, the president continues to aggressively fund-raise on Wall Street for Democrats, and all the while he is advised by Lawrence Summers, who took millions from Wall Street banks in 2008.

Don't feel like paying all your in taxes this year? Send the president $20 to help out his Democratic congressional pals campaigning for re-election next fall, and ask for a break when you file your Form 1040 this April.

Who knows, the president says he likes small contributors, and who he likes, and who pays him, seem to get very nice bonuses and tax breaks.

Professor Peter Morici is a recognized expert on economic policy and international economics. Prior to joining the university, he served as director of the Office of Economics at the U.S. International Trade Commission. He is the author of 18 books and monographs and has published widely in leading public policy and business journals, including the Harvard Business Review and Foreign Policy. Morici has lectured and offered executive programs at more than 100 institutions, including Columbia University, the Harvard Business School and Oxford University. His views are frequently featured on CNN, CBS, BBC, FOX, ABC, CNBC, NPR, NPB and national broadcast networks around the world.