Last week, in his "analysis" of Barack Obama's proposed "bank responsibility fee," the Associated Press's Jim Kuhnhenn got one important thing right and two others very wrong.
The part he got right was describing the proposed fee as a "tax." The first thing he got wrong was identifying the proposed move as a legitimate form of "populism." The second is his claim that the idea is "straight out of 'It's a Wonderful Life,'" the classic Christmas movie.
Here are Kuhnhenn's first five paragraphs:
It's not just about bad banking.
President Barack Obama's biting criticism of big banks frames the problem as a struggle between jobless, suffering Americans and banks making big profits and paying "obscene" bonuses.
It's populism straight out of Frank Capra's "It's a Wonderful Life," and it aims to score political points in the midst of a weak economic recovery that is fueling public doubts about the president's own economic policies.
Obama proposed a 10-year, $90 billion tax on the largest financial institutions on Thursday, saying he wanted the money to back any shortfall in the $700 billion Troubled Asset Relief Program launched to bail out foundering firms at the height of the financial crisis.
Obama's haves-versus-have-nots message was as explicit as any political message he has delivered as president.
The Cambridge Dictionary defines "populism" as "political ideas and activities that are intended to represent ordinary people's needs and wishes." It may represent the wishes of many that banks not pay out bonuses while much of the rest of the economy is suffering, but it's a long way from there to believing that arbitrarily extracting money from a selected few financial institutions does.
The "intent" to represent the American people's wishes that is supposed to be applicable in this case simply isn't there. Instead, the "intent," as seen in this graphic capture of an Organizing for America web page, is to use a misrepresented mob of largely non-"ordinary" people representing a tiny percentage of the population to intimidate these institutions into acquiescing to the tax as preferable to fighting it. This isn't "populism," but instead a clumsy yet still disturbing attempt at leveraged authoritarianism.
It's also an attempt at government plunder, as described by the Wall Street Journal in a Saturday editorial:
... the banks designated to pay the fee aren't those responsible for the losses. With the exception of Citigroup, those banks have repaid their TARP money with interest.
The real TARP losers—General Motors, Chrysler and delinquent mortgage borrowers—are exempt from the new tax. Why the auto companies? An Administration official told the Journal that the banks caused the crisis that doomed the auto companies, which apparently were innocent bystanders to their own bankruptcy. The fact that the auto companies remain wards of Washington no doubt has nothing to do with their free tax pass.
Also exempt are Fannie Mae and Freddie Mac, which operate outside of TARP but also surely did more than any other company to cause the housing boom and bust. The key to understanding their free tax pass is that on Christmas Eve Treasury lifted the $400 billion cap on their potential taxpayer losses expressly so they can rewrite more underwater mortgages at a loss.
In other words, the White House wants to tax more capital away from profit-making banks to offset the intentional losses that the politicians have ordered up at Fan and Fred.
In more blunt words, "want(ing) our money back" has nothing to do with it. Instead, as I described it here yesterday, this is "government-sponsored looting of the private sector on behalf of bankrupt government-sponsored enterprises."
How the bank tax has anything remotely to do with "It's a Wonderful Life" (full plot summary here) is a mystery Kuhnhenn failed to explain. I must have missed the scene in the movie where the people of Bedford Falls go to the government to get it to bail out the Bailey Building & Loan by taxing Mr. Potter's bank. Perhaps there's a special journalists' version of the film I'm not aware of.
This item was mentioned briefly at this BizzyBlog.com entry.
