Two months ago the POTUS proposed a tax on the biggest companies that received TARP funds (except of course GE Capital run by Obama buddy Jeff Immelt and GM/Chrysler effectively owned by Obama’s buddies at the UAW).
“My determination to achieve this goal is only heightened when I see reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people. We want our money back, and we’re going to get it.”
The real purpose of the tax was not to “get our money back” as the President said. It’s real intent was to demonize the big banks and at the same time collect tax revenue from the middle and upper classes in a surreptitious manner. Barack Obama is a lot of things, stupid is not one of them. He knows that any new tax placed on banks would be passed along to the consumer, and today the CBO warned of just that result.
Today the Congressional Budget Office (CBO) warned that “the ultimate cost of a tax or fee is not necessarily borne by the entity that writes the check to the government.” In a written response to Senator Grassley’s questionsabout the President’s proposal for a Financial Crisis Responsibility Fee the CBO said, “The cost of the proposed fee would ultimately be borne to varying degrees by an institution’s customers, employees, and investors.”
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“Customers would probably absorb some of the cost in the form of higher borrowing rates and other charges, although competition from financial institutions not subject to the fee would limit the extent to which the cost could be passed to borrowers. Employees might bear some of the cost by accepting some reduction in their compensation, including income from bonuses, if they did not have better employment opportunities available to them. Investors could bear some of the cost in the form of lower prices of their stock if the fee reduced the institution’s future profits.”
The CBO also warned that the availability of credit, still an economic problem for the US, could tighten, “The fee would probably lower the total supply of credit in the financial system to a slight degree. It would also probably slightly decrease the availability of credit for small businesses.”
In response to the CBO analysis, Senator Grassley said the findings from the Congressional Budget Office show that lawmakers need to understand the consequences before authorizing the tax designed to recoup taxpayer bailout funds used to stabilize the financial system.
“A lot of analysts have said banks would pass the fees onto their customers. The CBO analysis confirms this and adds a lot of points for consideration from a very credible source. Before this proposal moves forward, Congress needs to understand the consequences, good or bad.”
Congress knows the consequences, they need to care about the consequences higher fees for the consumer.