The blogosphere is having conniptions over Scott Brown’s announcement that he won’t vote for final passage of FinReg because of the $19 billion tax on banks that was incorporated at the last minute. The recurring theme is that $19 billion is a small amount of money and that anyway it’s going to be levied on the big banks that have benefited from government efforts to keep the financial system afloat.
Here’s what Ryan Avent has to say:
The fee in question was introduced during the conference session and is designed to cover the cost of the bill, that is, to make sure it’s deficit neutral. It’s a modest amount, and it’s levied on entities that have benefitted significantly from the massive government intervention deployed to keep the financial system afloat during the financial crisis.
And Joe Weisenthal jumps on the subject with this:
This whole thing is a bit silly. $19 billion, levies across the financial system, on various players based on their size is tiny. We repeat: tiny. And beyond that, this isn’t some kind of punitive tax; it’s designed to pay for the enforcement of the bill, which presumably Scott Brown is in favor of, if he likes the rest of the bill.
Can we please dispense with the notion that $19 billion is a paltry sum of money. That’s the sort of thinking that landed us in this mess to begin with. Ten billion dollars here and twenty billion there we were assured was nothing to worry about given that we were such a massive economy. Then we turned around and a billions had morphed into trillions, but don’t worry we’ll handle it someday.
Getting out of the hole we’ve dug for ourselves isn’t going to be done with a magic wand and there isn’t some $500 billion spending cut or tax that will suddenly appear and make everything all right. It’s going to get done the same way we got here, billions here and there that eventually add up to real money.
While I’m venting, would someone please explain just what this tax is supposed to cover. According to Avent it’s to cover the cost of the bill. Weisenthal says it’s to pay for enforcement. How in the world is this bill going to cost us $19 billion in governmental expenditures? Even the Pentagon does things more cheaply than this.
And, can we quit trying to sugarcoat this thing by calling it a fee or a levy. It’s a tax and no amount of verbal lipstick is going to change that fact.