Day 2:24 pm
President Obama on Thursday proposed a tax on the 50 largest banks that took TARP money last year. Obama said, “We want our money back.” On the surface it may seem reasonable – to some – to impose a tax on the “greedy” banks that took so much taxpayer money and caused our current financial crisis.
But what’s left out of the president’s argument is that the banks have already paid back two-thirds of the TARP money they borrowed with interest. Also missing from the discussion is the fact many of them didn’t want the TARP money in the first place, but were threatened by former Treasury Secretary Henry Paulson into taking it, regardless. In addition, several were told that they couldn’t pay back the money last year, after their balance sheets came back into line.
The irony in all of this of course, is that the banks wouldn’t even be in this predicament if it hadn’t been for the unwelcome intrusion of the federal government in the first place. But thanks to Congress – dating back to the CRA Act of 1977 signed into law by Jimmy Carter, and further accelerated by Bill Clinton’s loosening of any reasonable restrictions previously contained within – banks were forced to make high-risk loans to borrowers who could never hope to repay them. Add the thuggery of organizations like ACORN into the mix (whose actions were sanctioned by the federal government in the name of “fairness”), and it’s easy to see how we arrived at this precarious financial destination.
Back in 2005, some sane members of Congress, including Senator McCain, along with President Bush sounded the alarm for reform in the hopelessly corrupt Fannie Mae and Freddie Mac. However, instead of demanding accountability and reining in these organizations, Congress ordered them to make even more bad loans – backing them with hardworking taxpayers’ money.
President Obama’s proposed new tax would be in effect for ten years, and like most taxes, wouldn’t necessarily go away after the TARP funds are repaid. Predictably, the banking industry is opposed, declaring the tax to be punitive and unnecessary. Equally predictably, President Obama resorted to his typical class-warfare tactic by condemning the “massive profits and obscene bonuses” of the banking industry’s top earners as an excuse to exert even more government control.
For the moment at least, we live in a capitalist society, where the free market determines what is appropriate and what is “obscene”, not the government. Banks are comprised of divisions, some of which may profitable while simultaneously, others may be floundering. If the market determines that a high-achieving employee who greatly contributes to the success of his bank or financial institution merits a million-dollar bonus then his company has a choice: either pay him what he’s worth, or lose the valued employee to a competitor that will.
It seems that Democrats think that taxes solve everything. But history has shown that when you keep taxes low you actually create a greater revenue stream. When taxes are low, companies have more money to expand their businesses, and hire and retain high-quality employees. When taxes on individuals are lower, they have more money to purchase things, thus keeping the engine of the American economy – small business – growing. But this is a lesson lost on people that believe that government is the answer to all the nation’s ills. “Cap and Tax” environmental regulations and the Healthcare “reform” bills are just the two largest examples of the attitude that government and higher taxes are the answers to our woes.
The polls clearly show that the American people are ahead of our so-called leaders on this issue. The people know that they can better decide how to spend their hard-earned money than ideologues like Nancy Pelosi, Harry Reid and Barack Obama. And they know for sure that in these troubled economic times, they can’t afford any more taxes that are designed to change our behavior, not improve our nation.
The $787 billion “stimulus” didn’t create private sector jobs that would grow our economy and the tax base. What it did stimulate was the growth of government and the salaries of government and union employees. This growth of the federal government only leads to more regulations, fees and taxes that will ultimately prevent small businesses from recovering and in turn our economy as a whole from recovering in a timely fashion. Government doesn’t create wealth; government creates bureaucracy, waste and more dependence on government. It’s a vicious cycle and clearly it is unsustainable.
Steven Rosenblumcontinue reading