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Friday, January 15, 2010  

Take it to the Bank

It's been deservedly obscured by the news out of Haiti (I'll post my sermon on Sunday), but it's worth point out that the Obama Administration has made its first truly smart political move of the election year. The bank fee proposal is a pretty good idea on the merits, I think, but it has the added effect of putting the Republicans back on their heels on an issue they've been allowed to dominate, essentially by default.

The GOP anti-bailout war cry was always heavily salted with hypocrisy, given that the programs began under the last administration with plenty of GOP support. But whether genuine or not, the populism on bailouts has coexisted uneasily alongside the core GOP tenet that no money must ever be transferred from rich people to the federal budget under any circumstances. And there was never any doubt in my mind that, given the choice between making hay at the banks' expense and holding fast to the no-revenue-from-rich-people principle, the latter would win out. After all, this was essentially how the politics of banking regulatory reform were playing out: Republicans hooped and hollered about bailouts before obediently doing the bidding of Big Finance.

Now we're set to see the same dynamic play out, but framed by a clearer idea: a tax levied on the biggest institutions meant to cover the budgetary costs of the bailouts. Since the banks benefited from an implicit guarantee from the federal government, and since they are currently operating under a close to explicit guarantee, it seems that paying into the budget would be the least that could be asked--and given that this is the Obama administration, it is also probably the most that will be asked, but that's another story. Nonetheless, the proposal has drawn the ire of Michael Steele and other Republicans, who now have to decide whose side they're on: the taxpayers or the banks. That's the kind of choice that frames elections nicely.

posted by Benjamin Dueholm | 2:55 PM
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