President Obama’s plan to tax banks to recoup bailout funds is supported by Federal Reserve Chairman Paul Volcker, and described by “Time, BusinessWeek, and others as a “populist” measure.
But populism isn’t what it used to be. Though the banks are paying their people more than ever and giving out fat bonuses, conservatives are pushing back hard on the tax, and finding allies among moderate politicians, including Mayor Bloomberg.
Yesterday the Mayor described banking as a “major industry here” in the New York, and added, “you want to see what happens to a city when their major industry fails, just take a look at Detroit,” echoing a theme he introduced in the Bloomberg-Thompson race last fall.
Senator Kirsten Gillibrand also expressed concern that “this fee could disproportionately affect New York City’s economic recovery, which relies on a growing financial services industry,” though she did not mention Detroit.
Scott Brown, the GOP candidate for the Senate in Massachusetts in next week’s special election, has explicitly opposed the tax, and is now said to be ahead in the race. If he wins, the Democrats lose their 60 vote supermajority, and will have much more trouble passing anything that troubles the Republicans and their traditional constituencies, such as banks.
Though polls show that Americans don’t trust banks much, they traditional recoil at taxes, and if opponents of this tax can tie it to some harm to ordinary citizens, then the populist wave, such as it is, may be turned in the banks’ favor.