The New Bank Tax

President Obama’s bio shows that he taught Constitutional Law at the University of Chicago. That’s nice. And that would be the constitution of what country? Did you say the United States?

There is no doubt in my mind that large portions of the proposed Health Care Reform bill, notwithstanding whatever form comes out of Congress, will be declared unconstitutional. The Federal Government can do many things, but forcing people to buy a health care policy just because they were born doesn’t cut muster.

Likewise, forcing insurance companies to sell pre-approved government plans, and only those plans, smacks of National Socialism…that’s what Germany did. And let's not even talk about the preferential classes and states built into this thing. I can go on and on, but it is scary…and you should be afraid. If this monstrosity ever passes, it will tie up the courts for years, and go the way of the McCain/Feingold Campaign Reform Act...death by a thousand cuts.

Now Obama wants to tax the banks on outstanding liabilities to “punish” the banks for bad behavior. On its face, this type of legislation is unconstitutional. In normal capitalist societies, punishment is meted out by letting the bad-behaved entity fail, and go into bankruptcy. Both Bush and Obama didn’t let that happen. I disagree, but I understand why they did what they did, and how TARP was SUPPOSED to act. But as in all things government, it got perverted.

Politically, both parties will use this proposed $90 billion mea culpa to the public to satisfy the populist strain currently running through our society, and demanding revenge from the evil doers. Barney Frank gleefully said the money will go into the general fund to pay for the war in Afghanistan, and to increase social security disability. Just what we need, another increased entitlement. The Republicans, even though it’s against every fiber of their being to pass this sort of thing, will do it claiming it will reduce the deficit. Of course it will.

The banks aren’t saying a whole lot, but I am sure their lawyers are already at work challenging this “punishment tax” for participating in the TARP program whether they wanted to or not, and any first year law student will tell you the banks have nothing to worry about. Ex post facto punishment legislation is prohibited.

But it does make for good political theater. Unfortunately, the public will once again pay the price for political grandstanding in higher fees, higher interest rates, and abysmally tight lending standards. That translates into a stagnant economy, and permanently high unemployment, and staggering deficits.

I hope the members of Congress on both sides of the aisle believe the show is worth the price of admission that we will pay to watch.