14 Jan 10: President Obama has proposed a bank tax in an effort to recoup as much as $120 billion in projected losses for the Troubled Asset Relief Program (“TARP”). Although companies in a number of industries, including the auto industry, took advantage of TARP funds, the financial sector is being targeted for retribution right now. Currently there is public anger at Wall Street’s role in the financial crisis, and banks are being thought of as the “bad guys.” This mood gives the administration enough political leverage to impose a tax on only a select number of TARP recipients. The tax is also being driven by a budget deficit that may reach a record $1.5 trillion this year.
Government policy based on political efficacy is extremely dangerous. Unless economic policy is based on sound economic reality, there is no assurance as to who the next tax target will be. This uncertainty increases pessimism in the business sector, and impacts the ability of employers to project future costs, including payroll. Jobs suffer.
Francis Bacon, an early statesman and philosopher, stated “Look to make your course regular, that men may know beforehand what they may expect.” This is a philosophy I follow in my personal life and will continue to follow in my life as a statesman. The nation suffers when laws apply to different groups depending whether they are “in” or “out” of the circle of the group in power.