In a letter that will be sent to Pelosi and Boehner, the Blue Dogs, led in this case by Rep. John Tanner (D-Tenn.), are calling for a future tax to be imposed on finacial services companies if taxpayers lose money on the bailout package.
Tanner pitched the idea at a Blue Dog meeting on Wednesday, and again at a House Democrat Caucus on Thursday. Tanner is circulating a draft letter to Pelosi, Boehner, Senate Majority Leader Harry Reid (D-Nev.) and Minority Leader Mitch McConnell (R-Ky.). The proposal will only become an official Blue Dog policy position if two-thirds of the group supports it, a threshold that hasn't been reached yet.
Tanner and other Blue Dogs see this provision as an "insurance policy" for taxpayers, and it would amount to a 2 percent "fee" on taxable income of financial services firms.
Prudent investors protect themselves when making high-risk investments. The taxpayer is essentially being asked to make a high-risk investment to provide much needed liquidity to the financial markets. As stewards of the taxpayer's money, we should insure against any potential losses that might result from this action. For these reasons, we feel it is imperative Congress include a recoupment clause in TARP [Troubled Assets Relief Policy]," the Blue Dogs said in a draft letter to Pelosi, Boehner and Senate leaders. TARP is the formal name of the Wall Street bailout package.
"A recoupment clause, as we envision it, is essentially an insurance policy for the
taxpayer. Three to five years after enactment of TARP, the Secretary of the Treasury shall report on the program's net gain or loss to the taxpayer. If the plan results in the taxpayer showing a loss, then the amount of that loss would be recouped by a small fee imposed by the Internal Revenue Service on the financial services industry until the taxpayer recoups the loss. If the taxpayer comes out even or makes a profit, there would be no recoupment necessary."
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