Remember shortly after the election, when President Obama had a series of pleasant chats with prominent figures from the Corporate America? The White House seemed eager to improve relations with the business community, and as a result, a small legion of CEOs received quite a bit of face-time with the president in the Oval Office.
It’s early, but the outreach paid some dividends fairly quickly. Since the election, we’ve seen Big Business side with Obama on a series of key measures, including tax policy and the debt ceiling. Just this week, business groups also started lining up in support of immigration reform.
Ryan Grim and Zach Carter have an interesting piece this morning on how a leading House Republican is responding to the developments.
House Ways and Means Committee Chairman Dave Camp (R-Mich.) is considering legislation that would significantly increase taxes for the nation’s largest banks while providing tax breaks to struggling homeowners.
The draft legislation, which may get significant revision before it’s presented to a congressional committee, would be vehemently opposed by Wall Street and other major corporations that trade heavily in derivative securities.
The Huffington Post talked to a “Republican operative” who said Camp’s proposal is intended as “political payback.” In other words, the chairman of the House Ways and Means Committee is floating a tax hike on banks out of spite.
The efforts seems to be targeted in large part at the Business Roundtable, which represents the chief executives of many of the nation’s largest companies, and has a reputation in D.C. for being a reliable Republican ally, but which sided with Democrats on the need for balanced debt reduction, included new revenues.
Camp sent an angry letter to the Business Roundtable a month ago, and now Republicans are saying if there must be new revenue, it should be “on their backs.”
How big a deal is Camp’s bill? I think it’s safe to say the bank lobby won’t be impressed.
Camp’s new bill would harvest government revenues from complex financial transactions involving derivatives, some of which figured prominently in the 2008 banking collapse. Although the 2010 financial reform legislation would curb some excesses in the derivatives market, the legislation isn’t yet fully implemented, and leaves much of the market unregulated. Financial reform advocates have urged new taxes on derivatives to deter excessive risk-taking by big banks. […]
Camp’s bill would establish a new tax regime for derivatives, requiring banks to declare the fair market value of the products at the end of each year. Any increase in value would be considered corporate income, subject to taxation. It’s a more aggressive tax treatment than Wall Street enjoys for either derivatives or for trading in more traditional securities. […]
The bill would significantly strengthen the Volcker Rule, which bans banks from speculating in securities markets with taxpayer money. The Volcker Rule’s implementation has been delayed as bank lobbyists have flooded regulatory agencies in Washington, pillorying the ban with loopholes. Hefty tax burdens for proprietary trading would reduce bank incentives to engage in the risky activity.
How serious is Camp about this? It’s hard to say at this point, though I suspect it’s mostly about posturing and political chest-thumping. Camp wants to send a message that he’s displeased and see this as a vehicle. Even if the committee chair got serious about this, I imagine other Republicans would intervene to stop its progress.
The bill, in other words, is intended more as a brush-back pitch than a meaningful policy proposal.
But it’s the bigger picture I find interesting: in the wake of the 2012 elections, private-sector leaders are looking at President Obama as a leader who (a) isn’t going anywhere; and (b) is reaching out to them. And at the same time, they’re looking across the aisle at an increasingly reckless Republican Party – their ostensible allies – who no longer seem as trustworthy as they’d hoped.
It’s an angle worth keeping an eye on.