FacebookTwitterGoogle+RedditEmail

Obama’s Latest Ruse: the Bank Tax

When president Obama was awarded Advertising Age’s 2009 Marketer of the Year award, we were alerted to expect carefully crafted public relations posturing in defense of the reputation of Brand Obama. We have not been disappointed. The president has regularly taken verbal pot shots at the financial oligarchy in a cynical effort to convey the impression that he shares the public’s outrage at the behavior of the plutocrats. But he has thrown no sticks and stones at the banksters, who know as well as you and I that mere words can never hurt them.

None of Obama’s faux outrage has been as disingenuous as his Wednesday announcement that he will finally respond sympathetically to the public’s deep resentment of the administration’s tolerance -and therefore encouragement- of the bad guys’ looting of the public treasury.

Obama assured his constituents that he would “recoup every last penny for American taxpayers” by taking back, in the form of taxes on the banks, the wealth that households have been forced to transfer to the coffers of the instigators of the financial crisis.

The announcement was timed to offset what will surely be another surge of public anger at the expected announcement this week of the banks’ year-end bonus payments.

The proposed taxes would apply to financial institutions with more than $50 billion in assets and would extract about $90 billion from them over ten years. Obama’s central claim is that this would cover all losses incurred by the government under the Troubled Asset Relief Program (TARP). We are supposed to be relieved that households will in the end be repaid all that has been transferred from them by TARP. “We want our money back, and we’re going to get it,” said Obama.

Obama is perpetrating a massive ruse. The tax-the-banks proposal rests on conspicuously false empirical assumptions and appalling math.

A key premise of the tax proposal is that TARP is the government’s sole gift to the financial elite. This is of course false: TARP is in fact a relatively small fraction of the State’s total rescue effort. Financial institutions have also been treated to no-cost and virtually unlimited access to credit, broad guarantees against losses and lax regulation, to mention only the most conspicuous gifts. Even if TARP did represent the administration’s total commitment to financial institutions, Obama’s claim would still be nonsense. TARP handed $700 billion to the banks. How does $90 billion “recoup every last penny” of $700 billion? The president thinks, with good reason so far, that he can get away with anything. Anything. Hence the screamingly counterfactual premise and the slapstick math.

That’s not the worst of it. Neil Barofsky, the Special Inspector General charged with overseeing the bailout plan, reports that the bailout could end up costing $23.7 trillion. Critics of Barofsky accuse him of exaggeration. Let’s suppose they are right. Say Barofsky doubled the true cost of the government’s commitment. So what? Bloomberg reports, with no challengers, that the cumulative commitment to financial rescue initiatives amount so far to more than $8.5 trillion. $90 billion is a small drop in a big bucket.

How do these figures compare to what working people have lost? Households have so far lost $12 trillion in wealth in the wake of the crisis. By the end of the third quarter of 2008, shortly after the announcement of an impending collapse of the entire financial system, households had already lost $647 billion in real estate, $922 billion in stocks, $523 billion in mutual funds and $653 billion in life insurance and pension funds reserves. Total destruction of household wealth in Q3 2008 came to $2.8 trillion, the worst decline on record. That comes to four times TARP’s $700 billion. If “[w]e want our money back,” we’re dead out of luck. Obama knows this, but the man is an instrument of his financial masters, and the ad campaign functioning to obscure this reality requires big lies. The president has these coming out of his ears.

ALAN NASSER is professor emeritus of Political Economy at The Evergreen State College in Olympia, Washington. He can be reached at nassera@evergreen.edu

More articles by:

Alan Nasser is professor emeritus of Political Economy and Philosophy at The Evergreen State College. His website is: www.alannasser.org.  His latest book is Overripe Economy: American Capitalism and the Crisis of Democracy. He can be reached at: nassera@evergreen.edu

April 25, 2018
Stanley L. Cohen
Selective Outrage
Dan Kovalik
The Empire Turns Its Sights on Nicaragua – Again!
Joseph Essertier
The Abductees of Japan and Korea
Ramzy Baroud
The Ghost of Herut: Einstein on Israel, 70 Years Ago
W. T. Whitney
Imprisoned FARC Leader Faces Extradition: Still No Peace in Colombia
Manuel E. Yepe
Washington’s Attack on Syria Was a Mockery of the World
John White
My Silent Pain for Toronto and the World
Dean Baker
Bad Projections: the Federal Reserve, the IMF and Unemployment
David Schultz
Why Donald Trump Should Not be Allowed to Pardon Michael Cohen, His Friends, or Family Members
Mel Gurtov
Will Abe Shinzo “Make Japan Great Again”?
Binoy Kampmark
Enoch Powell: Blood Speeches and Anniversaries
Frank Scott
Weapons and Walls
April 24, 2018
Carl Boggs
Russia and the War Party
William A. Cohn
Carnage Unleashed: the Pentagon and the AUMF
Nathan Kalman-Lamb
The Racist Culture of Canadian Hockey
María Julia Bertomeu
On Angers, Disgusts and Nauseas
Nick Pemberton
How To Buy A Seat In Congress 101
Ron Jacobs
Resisting the Military-Now More Than Ever
Paul Bentley
A Velvet Revolution Turns Bloody? Ten Dead in Toronto
Sonali Kolhatkar
The Left, Syria and Fake News
Manuel E. Yepe
The Confirmation of Democracy in Cuba
Peter Montgomery
Christian Nationalism: Good for Politicians, Bad for America and the World
Ted Rall
Bad Drones
Jill Richardson
The Latest Attack on Food Stamps
Andrew Stewart
What Kind of Unionism is This?
Ellen Brown
Fox in the Hen House: Why Interest Rates Are Rising
April 23, 2018
Patrick Cockburn
In Middle East Wars It Pays to be Skeptical
Thomas Knapp
Just When You Thought “Russiagate” Couldn’t Get Any Sillier …
Gregory Barrett
The Moral Mask
Robert Hunziker
Chemical Madness!
David Swanson
Senator Tim Kaine’s Brief Run-In With the Law
Dave Lindorff
Starbucks Has a Racism Problem
Uri Avnery
The Great Day
Nyla Ali Khan
Girls Reduced to Being Repositories of Communal and Religious Identities in Kashmir
Ted Rall
Stop Letting Trump Distract You From Your Wants and Needs
Steve Klinger
The Cautionary Tale of Donald J. Trump
Kevin Zeese - Margaret Flowers
Conflict Over the Future of the Planet
Cesar Chelala
Gideon Levy: A Voice of Sanity from Israel
Weekend Edition
April 20, 2018
Friday - Sunday
Paul Street
Ruling Class Operatives Say the Darndest Things: On Devils Known and Not
Conn Hallinan
The Great Game Comes to Syria
Jeffrey St. Clair
Roaming Charges: Mother of War
Andrew Levine
“How Come?” Questions
Doug Noble
A Tale of Two Atrocities: Douma and Gaza
Kenneth Surin
The Blight of Ukania
Howard Lisnoff
How James Comey Became the Strange New Hero of the Liberals
FacebookTwitterGoogle+RedditEmail