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The proposed tax will be included in the fiscal year 2011 budget This decision is still significant because:
The White house could have waited. . As part of the TARP deal in 2008, the White House was required by law to impose this--or a similar--tax by 2013. In making this move, the White House has decided to move up the timetable, showing that it isn't completely tone deaf on the political implications of the bailout.
It will recover the losses. Although it is not entirely clear how much money the tax will recoup, or how much the federal government will lose as a part of TARP, the White House says the tax will run as long as is necessary to recoup all of the losses.
It will pick a fight. Republicans hate the idea. Banks hate the idea. On a media call with the White House this afternoon, it was clear that some financial reporters, such as Joseph DiStefano of the Philadelphia Inquirer, hated the idea (DiStefano called it "crazy" as a part of his question on the call). This is all very good.
It isn't just necessary for the White House to make this move in 2010, or to recover all of the losses. It is necessary to do so in a way that will anger bankers, Republicans and the financial media, thus publicly picking a political fight that will put Republicans on the side of large financial institutions.
As the governing party during a difficult economic time, Democrats must credibly portray someone else as the cause of the economic crisis or suffer massive electoral losses. Large financial institutions--"the banks"--are the most obvious culprit. Picking public fights with these institutions--fights where Republicans will side with banks--is the way to do this. A TARP related tax like this is a first step in pulling this all off. Even the White House's language, "we want our money back," is just right. Good job, White House.