Published January 15, 2010
This is a rush transcript of "Special Report With Bret Baier" from January 14, 2010. This copy may not be in its final form and may be updated.
(BEGIN VIDEO CLIP)
PRESIDENT BARACK OBAMA: We want our money back, and we're going to get it. And that's why I'm proposing a financial crisis responsibility fee to be imposed on major financial firms until the American people are fully compensated for the extraordinary assistance they provided to Wall Street.
VALERIE JARRETT, WHITE HOUSE SENIOR ADVISER: They want to levy a tax on the liabilities of those banks, the large institutions, the ones that contributed most to the economic crisis, and also the ones that benefited most from the taxpayer dollars.
REP. THADDEUS MCCOTTER, R-MICH.: It's going to be more expensive for the consumer. You will see less credit and higher unemployment as a result of inability to get credit. Other than that, I think it's a fine idea.
(END VIDEO CLIP)
BRET BAIER, ANCHOR: One Republican's reaction to the financial crisis responsibility fee. Most people are calling it the bank tax.
Here's an example of one bank that paid back its funds. Goldman Sachs was loaned $10 billion, paid back $11.1 billion. So there was a profit for the U.S. government of $1.1 billion.
The auto industry loaned, as you see there more than $81 billion, paid back $3.15 billion, still the U.S. government is owed $78.1 billion. The auto industry is not a part of this tax.
What about all of this? Let's bring in our panel: Steve Hayes, senior writer for The Weekly Standard; Juan Williams, news analyst for National Public Radio, and syndicated columnist Charles Krauthammer. Charles?
CHARLES KRAUTHAMMER, SYNDICATED COLUMNIST: This is being sold with incredible demagoguery as a payment. The president says I want my money back. In fact, the majority of banks have repaid. Some of the banks never received any of the TARP money, and some of them were forced into receiving it at the point of a gun in the Bush administration.
And, as you pointed out, the real delinquents here, GM and Chrysler, are not being asked to pay anything because of Democratic ties with Michigan and the UAW.
Now, there is merit here if it were portrayed in a different way. The banks, the larger banks, have, as a result of what happened in '09 and '08, an implicit understanding around the world that the U.S. government will step in.
So there is an implicit guarantee of their loans, which means they have preferential advantage in receiving loans because everybody understands in the end the U.S. government will step in. That might be worth taxing. It would be returning the favor.
But, only if you walled off the money and you kept it as a way to bail out the banks if they failed, the way that the FDIC imposes a fee on the regular banks that is set aside and held in case of a bankruptcy.
But this is not how it's portrayed. The way Obama is selling it, it is a punishment for old behavior rather than a fee that you would collect in return for a certain advantage as a result of what happened in ‘08 and ‘09.
BAIER: Juan, one Bush administration official, Tony Fratto, said that this is a Hotel California tax. You can check out of this program but you can never leave, for these banks that have paid up, they've paid up, but they are still going to be taxed, and likely pass it on to consumers.
JUAN WILLIAMS, NEWS ANALYST, NATIONAL PUBLIC RADIO: Well, the thing of it is it’s such a small amount of money. I mean, think about it for a second in terms of the bonuses that these banks and financial institutions have been giving out. It's about, you know, the bonuses are, you know, at the moment, let's say one percent of GDP, $140 billion.
What the president is talking about is a tax of about $9 billion. It's not even a small percentage. It's a minuscule amount of the bonuses.
Now, he could just simply tax the bonuses. Maybe that's what he should be doing. But I think the anger that he was expressing today, and I think Charles is right when he calls it demagoguery, but it is the flavor of the moment in American politics. It is pure populism, it is anger at Wall Street.
And this idea it's going to be passed on as we just heard passed on to the consumers or somehow constrict lending doesn't hold water.
STEVE HAYES, SENIOR WRITER, THE WEEKLY STANDARD: I will start with the second part first — yes, it does. For every one dollar that banks have, they lend 10. So if you’re taking $100 billion out, that is a trillion dollars in lending that is not likely to happen.
That is a problem at precisely the time that the U.S. economy, the world economy is in recovery. And it's a problem at precisely the time that the president of the United States goes on television repeatedly begging the banks to lend.
He is doing something — if this were to pass, if this actually were to happen, which I don't necessarily think is going to happen, he is doing basically the opposite of what he should be doing for the economy.
But I do agree with Juan that this is all about politics and optics. Basically what the president and Rahm Emanuel and David Axelrod want here is for the president to be on the side of the automakers and against the banks. It's really that simple.
And by doing this, by making this pitch the way that he is doing, you saw, I think the producers actually did a terrific job of laying out where the liabilities are. It's the automakers that owe the money. The banks have, in many cases, paid out the money or paid back the money. There are banks here that will be taxed that had nothing to do with TARP. There are foreign banks that are going to be taxed on this.
The president just wants to change the picture. He needs to be a populist going into the 2010 elections.
KRAUTHAMMER: It's all about the optics of the politics, because you’ve got populist resentment left and right in the country. And this is a way that you would tap into it.
But he is selling it — it's essentially a tax on the bonuses. It's a tax because of the bonuses. It's because he's exploiting the anger that he is saying that we are going to tax you.
But, in fact, there would be a way in which you could explain it in a legitimate fashion. Nobody is talking about it. There ought to be a fee as a result of the implicit government guarantee, and this probably is it.
But if it's going to end up in the Congress, it's going to be inflated. It's going to be a heavier tax and it will be all about the bonuses.
WILLIAMS: All the lobbyists are going to stop it in the Senate. If there is a populist heat here, it's going to be reflected in the House.
But I want to say Goldman had $250 billion in earnings. This tax would be 0.2 percent a year. It is no big deal given the amount of money these, I think, thieves on Wall Street have been, you know, sweeping in for themselves.
BAIER: Okay. So you would like to call it a financial crisis responsibility fee?
WILLIAMS: Look, I say this is all politics. I don't think there is any getting away from that. But the idea he wants to collect for the government something back for the fact that we helped these institutions stand up...
KRAUTHAMMER: He already got it.
HAYES: He has already gotten it.
BAIER: Could a deal to tax so-called Cadillac health care plans speed up work on a compromise reform bill? The panel will discuss that in three minutes.
(BEGIN VIDEO CLIP)
OBAMA: I know everybody in the media is all in a tizzy, all what's this is going to mean politically. Let me tell you something, if Republicans want to campaign against what we have done by standing up for the status quo and for insurance companies over American families and businesses, that is a fight I want to have.
(END VIDEO CLIP)
BAIER: President Obama speaking to Democratic lawmakers up on Capitol Hill late this afternoon.
There is a development, a tentative deal on one element of the negotiations between the House and Senate, and that is the tax on the so- called Cadillac plans, the 40 percent tax. It's in the Senate bill, the House members hate it, union members hate it.
They negotiated from $23,000 per family, the taxes would hit plans that were $23,000 to $24,000, a little hiccup in there that $1,500 of the plans for vision and dental just won't be counted, but they are still in the plan.
We're in the weeds but we're back with the panel. Steve, what about this?
HAYES: That's exactly what I want the federal government doing, you know, making the determinations of whether dental and vision are going to be covered.
We have reached the point where this is so preposterous, the level of detail, the level of deal-making is so preposterous it should make everybody outraged.
But, in a sense, it's just a continuation of what we have seen. It's just a different kind of deal-making. You saw the president making deals with big Pharma before you seen him making deals. That's what this whole process has been.
But if you are troubled by the politics of how health care is being put together, you are going to be even more troubled by the politics of health care once it's passed, because all of health care, the U.S. health care sector, is going to be determined by these kinds of political deals. And it's, I mean, it is a tragedy for the country.
BAIER: Juan, here is another doozy. The deal says exempt all union contracts from any tax from increase on the Cadillac plans until January of 2018. So if you are a union member and you have one of these Cadillac plans, you don't get taxed, but if you live next door and are not a member of the union and you have a Cadillac plan, you do.
WILLIAMS: It's ridiculous. I sit here as someone who thinks that the country needs some kind of health care reform, but what you are seeing there is just absurd. It's ridiculous.
And it's just a face-saving device to try to placate the unions at this point, who have been at the White House, who said they got a better deal when they went up and talked to Pelosi and Reid on the Hill.
And it puts the entire kind of jerry-rigged deal at risk, because I don't believe the Senate is going to buy in unless they are going to explain to them how it's going to be paid for. And if you start taking away things such as the tax on the Cadillac plans, well then how do you compensate for that? Where do you compensate for that?
Now, president Obama...
BAIER: You increase the Medicare payroll tax.
WILLIAMS: That's exactly right. That's the other idea that's being discussed.
But what that means is, you know, recently the polls have shown — the Gallup had the polls going up a little bit for the health care plan, but if the seniors buy off, and that's exactly what's going to happen if you start attacking Medicare, then he says he reads the polls and letters at night. This is very difficult.
KRAUTHAMMER: The hypocrisy here is really sad. This is the president who ran on a premise that he would bring new politics, where the special interests would not write the bills, where this would be a politics of the people, that there would be transparency. And this is the most corrupt, deal-swapping piece of legislation in memory.
What you have is a bill being written by Democratic constituencies on behalf of Democratic constituencies. Here of course it’s the union members who are getting a break.
And the biggest corrupt deal of all is what's not in any of the bills. The biggest drain on health care in the country, huge, in the hundreds of billions of year, is the unnecessary procedures and practices as a result of illegal malpractice system totally out of control, defensive medicine. Everybody understands that.
There is not a word about it in the bills. That's because the trial lawyers own the Democratic Party.
This is a bill where if you are a Democratic constituent like a member of a union, you get a break or if you are a trial lawyer, you get a break. If you are not, you pay for everybody else.
BAIER: Steve, quickly, the House Majority Leader Steny Hoyer said, ‘We are going to do it until we get it right.’ The president today telling lawmakers ‘I want to campaign on this issue.’ Boy, you talk about the specifics, it doesn't seem like it's a great political winner.
HAYES: No, it certainly doesn't seem like a great political winner. And increasingly you hear Republicans talking about campaigning against — on repealing whatever passes. And there are Republican and conservative interest groups like the Club for Growth that are saying we want to make Republicans running for office pledge that they will repeal.
BAIER: That is it for the panel, but up next, we will see how Americans are pitching in to help the needy in Haiti.
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