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  • A Snake Oil Sales Pitch for President Obama's Bank Tax

    It must not be easy being Treasury Secretary Timothy Geithner, these days.

    His latest task is to sell a skeptical Congress on the Obama Administration’s $90 billion bank tax with something of a convoluted snake oil sales pitch. He tried to make his argument to the Senate Finance Committee on Tuesday.

    You see, Geithner explained, “Banks should bear the costs for bank failure,” and the tax is really a “too-big-to-fail tax” designed to recoup funds used to bail out banks under the Troubled Asset Relief Program.

    Unfortunately for Geithner, that went over about as well as trying to sell a ketchup popsicle to a woman in white gloves. And with good reason.

    Here’s why. The banks who received bailout funds already repaid the government, so the very premise of the tax is null and void. Then there’s the fact that those who haven’t repaid their bailout funds – Fanny Mae, Freddie Mac, General Motors and Chrysler – don’t have to pay the tax. And the worst feature? Consumers will bear the brunt of the tax, according to the Congressional Budget Office.

    This isn’t to say that Geithner didn’t come armed with answers to some of these critiques.

    Why don’t Fannie and Freddie have to pay the tax, Sen. Orrin Hatch (R-UT) asked? Geithner said that since they’ve been taken over by the government, taxing them would be “one hand of government paying another.” (That means, then, that there’s a de facto advantage to being publicly-owned in Obama’s America.)

    And what about GM and Chrysler? Geithner said they aren’t being taxed because they didn’t cause the economic crisis, but were merely victims. Geithner’s logic fails, though, because consumers will be the ones paying the bank tax. Aren’t they innocent victims, too?

    Geithner said, “This is a simple and fair principle: banks, not the taxpayer, should pay for bank failures.” No matter how many times he says it, the fact remains that banks have already repaid the American people, and under the bank tax, it is the taxpayers who will pay.

    Good luck selling those popsicles.

    Posted in Ongoing Priorities [slideshow_deploy]

    5 Responses to A Snake Oil Sales Pitch for President Obama's Bank Tax

    1. Gary Wise says:

      Someday taxpayers will realize that any time business has to pay more for something, such as materials or added taxes to the govenment, the price of the product goes up by passing the increased cost of doing business to the public. Economics 101. College grad, don't think so, show me the deploma!

    2. Ben of Houston says:

      Businesses don't pay taxes. The business's customers pay taxes. How are so many in congress ignorant of basic rules of economics? I'm not talking college level here, but Congress falls for falacies that I would fail high schoolers for using.

    3. Wildcat from Dallast says:

      One need only look to who was rendering these preposterous answers to evaluate their veracity. None other than, “Turbo Tax Timmy Geithner” is at it once again trying to demonstrate why Obama said long before that he is the only man for the job. I suspect that is because he has no scruples and can easily lie without flinching without fail.

      In my assessment there is more than a de facto advantage to being publicly-owned in Obama’s America. An oblique view would reveal that the current administration firmly believes neither the Congress (Sen. Dodd (D) Connecticut and Rep. Barney Franks (D) Massachusetts) who wrote & pushed the changes in mortgage lending and then refused to fix it when the problem with Fannie & Freddie became more than easily evident are at fault and of course Fannie & Freddie themselves. However, the automakers GM & Chrysler were not due to misguided financial regulations but had other internal problems that had external effects. And, of course they are not banks.

      The automakers that chose to get bailout monies under TARP had long suffered from subpar union labor contracts. Those contracts appeared to be a boon for union employees but were excruciatingly painful to their employers because they essentially lost money with every vehicle they sold! GM & Chrysler had contracts in which union attorneys had negotiated with senior management to basically pay for two items no employer should be on the hook for (legally) and that prevented them from remaining competitive. One was paying them almost equal wages (or close to the routinely paid amount when fully performing their tasks) when they were laid off, even when they were offered their same job at a nearby plant for which they refused to work without losing their “pay-for-nothing” scheme and without other penalty! In fact, I thought that I had read they also received unemployment compensation from the government during this period as well. The other was paying retirees both higher than realistic retirement pay and paying 100% of their retired health insurance premiums!

      As I review the situation it simply has the strong appearance that Obama paid back his union contributors (UAW and SEIU) for their huge campaign contributions (that came off the backs of union labor) by saving their union pay and benefits by bailing out these two automakers with cash and then added to that by purchasing a boatload of stock essentially making them controlled (and owned) by the federal government.

      The resolution to this should be to give no more funds to Fannie & Freddie, either privatize them or simply let them fail and take their remaining assets without using any taxpayer money to give golden parachutes to those leaving and make GM and Chrysler start buying back their own stock (now government owned) at a set pace per quarter (sort of like dollar cost averaging for businesses) until they pay the taxpayers back with interest. If they cannot become competitive in today’s market evidenced by not selling the vehicles then they have to make cuts like any other business as they either meet their budget or, do what should have happened in the first place, file for bankruptcy, renegotiate their contracts etc. and continue to either respond to the market or fail. The federal government has no place in the market to pick and chose winners and losers in a Capitalistic system. IF the federal government gets to pick and chose winners and losers then we the people lose.

    4. James o. Brown Brown says:

      How much has the closing of Commercial Banks cost the American tapayer ?

      It is my understanding that the losses incured when a Commercial Bank closes is absorbed by the

      FDIC which is funded by the Commercial Banks. Therefore I don't beleive any taxpayer has lost any

      money due the the Bank Closings.

    5. Ross Wolf says:

      Could Obama Be America’s First Defacto President?

      Innocent Americans increasingly are sent to prison based on false evidence manufactured by police forensic crime labs. Now President Obama wants the power to incarcerate U.S. Citizens not on evidence, but for what they might do.

      Compare: Two days after the 1933 burning of Germany’s Parliament Building, blamed on communists, Hitler responded with a powerful speech before Parliament. Hitler asked Parliament to suspend sections of the Reich Constitution that protected Citizens’ Rights and Civil Liberties. Hitler said the suspension was necessary so government could protect the homeland from being destroyed by communists. Hitler promised Parliament the Constitution would later be restored. After Parliament passed Hitler’s Discriminatory Decrees and Hitler signed it February 28, 1933, Hitler immediately used the news laws to abolished Parliament. See Hitler’s 1933 Discriminatory Laws below:

      Obama gave a speech in May 2010, that proposed incarcerating in indefinite prolonged detention without evidence, any person government deemed a “combatant” or likely to engage in a violent act in the future; that would include U.S. Citizens “without evidence of wrongdoing.” With that amount power Obama like Hitler could arrest members of Congress, drag U.S. Citizens off the street and from their homes to be imprisoned indefinitely based only on Government’s claim they are a “combatant” or likely to engage in a violent act in the future.

      If Congress approves Obama’s categories of people likely to engage in violent acts, overnight millions of lawful U.S. activists could be subject to arrest, Indefinite Prolonged Detention. When you examine Obama’s speech, it appears Obama wants retroactive power to incarcerate anyone government claims (prior) supported violent acts on the premise that person is likely to support violent acts in the future: U.S. activists would be extremely vulnerable because no activist can control what another activist or group might do illegally they network with domestically or overseas. Government would only have to allege a person; group or organization might commit a violent act in the future to order Preventative Detention of lawful participants with no evidence whatsoever. Americans would be afraid to speak out.

      It is foreseeable any “individual” who writes on the Internet or verbally express an opinion against or entity of U.S. Government or its coalition partners could be deemed by authorities a “Combatant” or likely to engage in or cause violent acts: government too easily could claim an author’s writings inspired people in the past and will in the future to commit or support violent acts. It is problematic that indefinitely detained U.S. Citizens not involved in terrorism or hostile activities, not given Miranda Warnings or allowed legal counsel; interrogated, will be prosecuted for ordinary crimes because of their alleged admissions while held in indefinite “Prolonged Detention. Obama wants the power to override the U.S. Constitution. Obama wants the power to detain indefinitely any American without probable cause or evidence, based on conjecture someone might do something violent in the future.

      Obama similar to Hitler is centralizing power in the federal Government by getting passed legislation the U.S. government could potentially use to intimidate and threaten corporations among others. Hitler got passed similar laws shortly before the burning of the German Parliament building blamed on the communists. Immediately after the fire, Hitler used his new laws to coerce corporations and influential Citizens to support passage of fascist legislation that suspended provisions of the German Constitution that protected Citizens’ freedoms and civil liberties. Obama is now approaching a position where he can use similar new laws, including the Patriot Act and 200 asset forfeiture laws to seize any corporation or individual’s assets; and force U.S. corporations and other institutions like Hitler did to support legislation that threatens or curtails rights of Americans.

      More recently Obama has moved forward to crush Free Speech, silence his critics by pushing passage of HR 5175: this abomination will choke the 1st Amendment, denying the right of free speech to ordinary Americans. Under Title II: groups like Gun Owners of America and other groups including bloggers that only mention “public officials” within 60 days of an election, could be required to file onerous disclosures–and potentially have to disclose their membership lists—despite the Supreme Court ruling in NAACP v. Alabama that held membership lists like those of GOA's) are off limits to government control. Is Obama’s support of HR 5175 similar to what Hitler did to shut up his critics? In the run up to Parliament passing his police state laws including the 1933 Discriminatory Decrees that abolished Citizen’s Free Speech, Hitler employed thugs to beat up reporters, arrest anyone who had courage to criticize the Fuhrer or his Nazi government or expose introduced legislation. Is Obama by supporting HR 5175 to shut up his critics, trying to take American to the same place?

      Alarmingly the Obama Government recently employed a vendor to search Internet social networking sites to collect information about Americans that could potentially be used by this government to injure Americans, for example, if you apply for a federal job, your name might be crossed referenced by the Obama Government with comments you made at Websites against Obama; or if you make application at a bank for a loan the Government has control since the financial crisis, could your Internet comment(s) prevent you getting that loan? Obama’s monitoring of the Internet sites can too easily be used by Government to intimidate Citizens from speaking out. Obama Top CZAR Cass Sunstein prepared a 2008 paper that proposed spying on Americans, infiltrating groups and organizations to obstruct Free Speech, disrupt the exchange of ideas and disseminate false information to neutralize Americans that might question government.

      See: http://www.wnd.com/?pageId=121884

      See Hitler’s 1933 Nazi Laws below:

      DECREE OF THE REICH PRESIDENT FOR THE PROTECTION OF THE PEOPLE AND STATE

      Note: Based on translations by State Department, National Socialism, 1942 PP. 215-17, and Pollak, J.K., and Heneman, H.J., The Hitler Decrees, (1934), pp. 10-11.7

      In virtue of Section 48 (2) of the German Constitution, the following is decreed as a defensive measure against Communist acts of Violence, endangering the state:

      Section 1

      Sections 114, 115, 117, 118, 123, 124, and 153 of the Constitution of the German Reich are suspended until further notice. Thus, restrictions on personal liberty, on the right of free expression of opinion, including freedom of the press, on the right of assembly and the right of association, and violations of the privacy of postal, telegraphic, and telephonic communications, and warrants for house-searches, orders for confiscations as well as restrictions on property, are also permissible beyond the legal limits otherwise prescribed.

      Section 2

      If in a state the measures necessary for the restoration of public security and order are not taken, the Reich Government may temporarily take over the powers of the highest state authority.

      Section 4

      Whoever provokes, or appeals for or incites to the disobedience of the orders given out by the supreme state authorities or the authorities subject to then for the execution of this decree, or the orders given by the Reich Government according to Section 2, is punishable—insofar as the deed, is not covered by the decree with more severe punishment and with imprisonment of not less that one month, or with a fine from 150 up to 15,000 Reichsmarks.

      Whoever endangers human life by violating Section 1, is to be punished by sentence to a penitentiary, under mitigating circumstances with imprisonment of not less than six months and, when violation causes the death of a person, with death, under mitigating circumstances with a penitentiary sentence of not less that two years. In addition the sentence my include confiscation of property.

      Whoever provokes an inciter to or act contrary to public welfare is to be punished with a penitentiary sentence, under mitigating circumstances, with imprisonment of not less than three months.

      Section 5

      The crimes which under the Criminal Code are punishable with penitentiary for life are to be punished with death: i.e., in Sections 81 (high treason), 229 (poisoning), 306 (arson), 311 (explosion), 312 (floods), 315, paragraph 2 (damage to railroad properties, 324 (general poisoning).

      Insofar as a more severe punishment has not been previously provided for, the following are punishable with death or with life imprisonment or with imprisonment not to exceed 15 years:

      1. Anyone who undertakes to kill the Reich President or a member or a commissioner of the Reich Government or of a state government, or provokes to such a killing, or agrees to commit it, or accepts such an offer, or conspires with another for such a murder;

      2. Anyone who under Section 115 (2) of the Criminal Code (serious rioting) or of Section 125 (2) of the Criminal Code (serious disturbance of the peace) commits the act with arms or cooperates consciously and intentionally with an armed person;

      3. Anyone who commits a kidnapping under Section 239 of the Criminal with the intention of making use of the kidnapped person as a hostage in the political struggle.

      Section 6

      This decree enters in force on the day of its promulgation.

      Reich President

      Reich Chancellor

      Reich Minister of the Interior

      Reich Minister of Justice

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