Once Again, Obama Administration Shows Its Ignorance of How Business Operates

A story  out of Washington this morning says the Obama administration is considering levying another tax on banks to help recoup some of the massive outlays made through the TARP program. This is another in a list of "Seemed Like a Good Idea at the Time" plans that have come out of this administration over the last 12 months.

Regular readers of this blog know that numerous posts have called the banking industry to task, deservedly so. But this is different.

Here's the Obama complaint: Banks are set to pay another round of huge end-of-year bonuses to their best employees, and the leftists who control Washington now are again upset that these high-producing bankers would actually earn more-a lot more-that other working stiffs.

You see, leftists like Barack Obama, Eric Holder and their Chicago mob think that everything is a zero-sum game. That means that if you win it necessarily means that it's at my expense. But these highly paid bankers have brought millions of dollars into the banks as they were supposed to. They'll take their bonus money and upgrade their homes, either building or buying, purchase yachts and take ski vacations. In the process they will provide money that eventually will hire and pay real estate workers, contractors, carpenters, boat builders, ski lift operators, hotel staff and restaurant workers. That's how a growing economy grows. And how a 10% unemployment rate shrinks.

But Pres. Obama had demonstrated a shocking lack of knowledge-in fact, an ignorance and hostility to-how business works. He and his mob would prefer an employment model that is devoid of merit. Think of a teachers contract or a union pay scale. The left won't rest till every ounce of incentive, creativity, and ambition is bred out of Americans in the workplace and in business. So the administration is predisposed to being against anyone working hard and joining that top tax bracket. (Although they should be thrilled, given how they are punishing the most successful Americans with the burden of supporting more than 50% of the population.)

There is a second reason why their thinking is just plain stupid. Workers who received these large bonuses generally have employment contracts. Those legal documents specify what the workers are to receive. Employers have no legal right to change the terms of those contracts unilaterally. What's more, the liability to the banks for these bonuses has already been calculated into the budget. Now comes the Chicago mob threatening to tax the banks even further. Those taxes have not been accounted for in the budgeting process. Which means the banks will do what companies always do when costs go up: They'll pass them on to consumers like you and me. They will pass that tax on in the form of lower interest payments, higher credit card fees or new fees that didn't exist before the tax.

What this means is that you and I are the ones who will really be paying the tax. At the end of the day the overpaid bankers will have their bonuses. The banks will retain their most productive employees. The Obama administration will have more money to waste, which is what it seems to do best. And you and I will be poorer for it.

If you want to know why the unemployment rate stubbornly refuses to budge from 10%, look no further than 1600 Pennsylvania Avenue.

Just thought you might like to know.