ABC News' Political Punch points to something that has been obvious since the announcement of Obama's budget and has been spoken of often but not acknowledged by this administration.
In January the President unveiled a proposal to impose a fee on about 50 of the nation's biggest banks with assets of $50 billion or more in an effort to recoup around $90 billion of taxpayer money dished out as part of the Wall Street bailout.
"We want our money back and we're going to get it," the President said.
But the Congressional Budget Office today warned that "the ultimate cost of a tax or fee is not necessarily borne by the entity that writes the check to the government."
"The cost of the proposed fee would ultimately be borne to varying degrees by an institution's customers, employees, and investors," the CBO said today in a letter to Sen. Chuck Grassley.
"Customers would probably absorb some of the cost in the form of higher borrowing rates and other charges, although competition from financial institutions not subject to the fee would limit the extent to which the cost could be passed to borrowers. Employees might bear some of the cost by accepting some reduction in their compensation, including income from bonuses, if they did not have better employment opportunities available to them. Investors could bear some of the cost in the form of lower prices of their stock if the fee reduced the institution's future profits."
The availability of credit - already a problem for some consumers and businesses - could also be limited by the proposed fee, the CBO said.
"The fee would probably lower the total supply of credit in the financial system to a slight degree. It would also probably slightly decrease the availability of credit for small businesses."
The effect of the fee on the banks, the CBO said, would be "small".
Emphasis mine.
The banks will barely feel the effects of Obama's policy here, it is the people, the employees, the customers that will eventually pay and the CBO is very clear on this.
Hot Air extrapolates:
Let’s make sure we extrapolate this for everyone onto other public policies, while we’re at it:
- Increasing the minimum wage forces businesses to pay more for labor. Either they hire fewer people or they raise prices — which undermines the buying power of those who make the least amount of money.
- A carbon tax or cap-and-trade bill will force energy producers to either raise prices to its customers or scale back power production, which will force businesses to either raise prices or cut back production, which will mean more cost or more scarcity for consumers — both of which are inflationary.
- Higher fees on insurers, medical-device manufacturers, and other goods and services in the health-care industry mean higher prices for consumers in the form of increased premiums or in greater scarcity as suppliers fail to come to market.
Imposing higher costs on business means higher costs for consumers. It means fewer jobs, less consumer choice, less innovation, and economic decline. I’d be surprised if the CBO analysis itself doesn’t end with the word duh in the last sentence.
Related:
The Hill headlines with "CBO: Huge deficits to average $1 trillion per year over the next decade."
Wapo with "National debt to be higher than White House forecast, CBO says"
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