• The Heritage Network
    • Resize:
    • A
    • A
    • A
  • Donate
  • In Pictures: Obama’s Bank Tax - Robbing Peter to Pay Paul

    Obama's Bank Tax - Winners and Losers

    In his State of the Union Address, President Barack Obama proposed “a modest fee” on banks that “would pay back the taxpayers who rescued them in their time of need.” In truth, his bank tax would hit financial institutions who have paid back their bailout funds, with interest, while those who haven’t—Fannie Mae, Freddie Mac, General Motors and Chrysler—would get off scot-free.

    As Politico reports, Sean Ryan at Wisco Research firm says Obama’s tax would have other effects, too. From Politico:  “[Ryan] predicts the banks will simply pass on the cost of the new fee to their corporate customers, which quite likely will move it along to consumers when possible.”

    And more perversely, Ryan notes, the tax revenue will foot the bill for the aforementioned firms that received bailouts, yet haven’t paid anything back:

    Since most banks either are in the process of paying back bailout money with interest or have already paid it back, “the loss in the [Troubled Asset Relief Program] that is gone and is never coming back under any scenario is the money extended to GM and Chrysler,” said Ryan. “So this is taxing banks to fund the auto bailout.”

    Heritage’s Senior Research Fellow David John says the tax will also make it difficult for banks to resume lending:

    While Administration officials urge banks and other firms to start lending again, the new tax … would discourage them from taking risks. The “fee” would apply regardless of a firm’s profitability and would make it even harder for firms recovering from last year’s losses to rebuild the capital needed to back up lending.

    John says it’s the “wrong approach to reduce the swollen deficit,” and rightly concludes, “It is a bad idea being used to score political points and should be dropped.”

    Posted in Economics [slideshow_deploy]

    11 Responses to In Pictures: Obama’s Bank Tax - Robbing Peter to Pay Paul

    1. Bridget, Dana Point says:

      "In truth, his bank tax would hit financial institutions who have paid-bank their bailout funds, with interest,"

      It should be "who have paid back their"…

    2. Drew Page, IL says:

      Any system based on the premise that it's ok to "rob Peter to pay Paul" can always count on the support of Paul.

    3. Tim Az says:

      It's the right approach if you want to keep economic recovery from occurring. This keeps America on track for collapse.

    4. Ray, Hampton VA says:

      "Robbing Peter to pay Paul" never works and here's one reason: When you rob Peter to pay Paul, what happens when Paul goes broke and can't pay back Peter? This makes Peter mad and makes him sore. And, folks, you can't do business with a sore Peter!

    5. Jeff, California says:

      I have a hard time believing this. Are you SURE the new tax would be enforced on those banks that have already paid us back? I highly doubt the tax will go into effect that way.

    6. Pingback: Home Loan Rate Calculator | Your Home Mortgage Loan

    7. Louis Levy Dayton OH says:

      It's all suggestions.

    8. Paul Agostino says:

      what else would you expect from a person who has brought fear into the american peoples lives with his attempts to force us into living conditions that are alien too our way of living . my personal opinion is that he he is the manchurian canidate ,who is really behind him ?, he is most definetly not working for us, and our congressmen and women are a disgrace as they will find out in November its a shame they get paid for ever . people who are armed are citizens people who have been disarmed are subjects

    9. Jeanne Stotler,Woodb says:

      Any tax on a corp. or business is a tax on us, BHO ijust doesn't get it, all cost are past on to the consumer.

    10. Pingback: There Is Nothing Fair About Obama’s Wall Street Bailout Tax | The Foundry: Conservative Policy News.

    11. Pingback: There Is Nothing Fair About Obama’s Wall Street Bailout Tax | Step Down Obama

    Comments are subject to approval and moderation. We remind everyone that The Heritage Foundation promotes a civil society where ideas and debate flourish. Please be respectful of each other and the subjects of any criticism. While we may not always agree on policy, we should all agree that being appropriately informed is everyone's intention visiting this site. Profanity, lewdness, personal attacks, and other forms of incivility will not be tolerated. Please keep your thoughts brief and avoid ALL CAPS. While we respect your first amendment rights, we are obligated to our readers to maintain these standards. Thanks for joining the conversation.

    Big Government Is NOT the Answer

    Your tax dollars are being spent on programs that we really don't need.

    I Agree I Disagree ×

    Get Heritage In Your Inbox — FREE!

    Heritage Foundation e-mails keep you updated on the ongoing policy battles in Washington and around the country.

    ×