House Republicans are organizing an effort in conjunction with the Chamber of Commerce to block the bank tax President Obama has proposed to recover lost bailout funds.
If Obama' proposal was equal parts policy and politics, the GOP support of the banks can only come as a welcome gesture. To be clear about what kind of backing the effort has, Rep. Peter King (R-N.Y.) splashes in bold across the top of the letter: "The U.S. Chamber of Commerce strongly supports this effort"
When Congress bailed out the banks, it included a provision to instruct the Treasury Department to make sure that all losses are recouped once the situation stabilized so that taxpayers didn't take a loss. Treasury Secretary Tim Geithner referenced that section in defending the bank fee before a congressional panel Wednesday.
King voted for the bailout, which includes section 134, "Recoupment."
The section "[r]equires that in 5 years, the President submit to the Congress a proposal that recoups from the financial industry any projected losses to the taxpayer.
"Upon the expiration of the 5-year period beginning upon the date of the enactment of this Act, the Director of the Office of Management and Budget, in consultation with the Director of the Congressional Budget Office, shall submit a report to the Congress on the net amount within the Troubled Asset Relief Program under this Act. In any case where there is a shortfall, the President shall submit a legislative proposal that recoups from the financial industry an amount equal to the shortfall in order to ensure that the Troubled Asset Relief Program does not add to the deficit or national debt."
King did not immediately return a phone call seeking comment.
The congressman's letter to his colleagues is below, followed by his proposed letter to the president.
The U.S. Chamber of Commerce strongly supports this effort
Oppose the Bank Tax: Support Jobs and Economic Growth
I invite you to join me in sending a letter to President Obama in opposition to his proposed bank tax. On January 14, 2010 President Obama proposed a 10-year, $90 billion tax on our largest financial institutions that is expected to be included in the FY2011 budget. This proposal could have a detrimental effect on job creation and economic growth.
Reasons to oppose the bank tax include:
* $90 billion in taxes means $90 billion less capital available for lending.
* Restrictions on capital will hurt small businesses and other job creators - limiting their ability to grow and create new jobs.
* The tax burden will be passed along to the American consumer.
* American competitiveness will be weakened - driving capital overseas and weakening economic growth.
Our biggest priorities should be job creation and economic recovery, not more taxes. If you would like to sign onto the attached letter in opposition to the bank tax, please contact Carol Danko of my staff at email@example.com or 5-7896 by Thursday, January 28, 2010.
PETER T. KING
Member of Congress
January XX, 2010
President Barack Obama
The White House
1600 Pennsylvania Avenue NW
Washington, DC 20500
Dear Mr. President,
We are writing today to express strong opposition to the so-called Financial Crisis Responsibility Fee, or bank tax, which was proposed on January 14, 2010 and is expected to be included in your budget. A 10-year tax on our nation's largest financial institutions is not the solution to our nation's economic crisis.
TARP funds should fully be recouped; however, this must be done in a way that protects the consumer and stimulates economic growth and job creation. Instead, the proposed tax on liabilities could cost some financial institutions over $1.5 billion each. This cost will no doubt be passed down to the Main Street consumer. In today's economy, now is not the time to ask Americans to bear another tax burden.
Our biggest priority should be job creation and economic recovery. History has shown us that our small businesses play a major role in job growth. Your bank tax will restrict access to capital for small businesses and other job creators.
Finally, it is important that America's financial institutions remain competitive in the global economy. By imposing this bank tax on our largest firms, we run the risk of driving capital overseas, where there are less obstacles and fees. A lack of competition will simply stifle economic growth.
This bank tax will stunt economic growth and job creation, impose a huge burden on consumers, and hurt American competitiveness. It is for these reasons that we strongly oppose the bank tax and urge you not to include it in the Fiscal Year 2011 budget proposal. Thank you for your consideration.