In the last few weeks we’ve witnessed a series of events that reveal the Obama administration’s juggling act. It has sought to introduce policies to maintain growth and tame the fiscal deficit, while also garnering the Congressional support it needs to see them pass. The Democrats’ loss of the Massachusetts Senate seat, though, raised questions about President Obama’s ability to move forward on financial regulation, fiscal austerity and health care reforms. Obama’s waning political capital will stand in the way of achieving his fiscal, social and economic goals.
Obama on Jan. 14 proposed a Financial Crisis Responsibility Fee, a tax levied on the non-deposit liabilities of the largest financial institutions to cover the expected losses from the TARP program. The tax, expected to be imposed for at least 10 years, with an assessment of 15 basis points per year, would raise $90 billion over that period and approximately $117 billion over 12 years. Only firms with consolidated assets greater than $50 billion would be affected, and over 60% of revenues would most likely be garnered from the 10 biggest firms. U.S. subsidiaries of foreign firms would also be subject to the fee.
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