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.