Emergency Economic Stabilization Act of 2008
Title I - Troubled Assets Relief Program
Sec. 134. Recoupment.
Upon the expiration of the 5-year period beginning upon the date of the enactment of this Act, the Director of the Office of Management and Budget, in consultation with the Director of the Congressional Budget Office, shall submit a report to the Congress on the net amount within the Troubled Asset Relief Program under this Act. In any case where there is a shortfall, the President shall submit a legislative proposal that recoups from the financial industry an amount equal to the shortfall in order to ensure that the Troubled Asset Relief Program does not add to the deficit or national debt.
General Comments on Emergency Economic Stabilization Act of 2008
This section is a joke. It should be deleted entirely. It misleads taxpayers into thinking they're being protected. This provision is fake, a fig leaf that allows members to make speeches saying that any cost will be recouped.
During House floor debate on H.Res. 1517 (the procedural rule that prescribes how the bill is considered), Rep. Brad Sherman (D-CA) said this provision will never work, Among other arguments, he pointed out that many entities benefiting from this program will be gone in five years. He also noted that 4,100 bank lobbyists will stop any effort to tax the "good" banks to pay for the sins of the "bad" banks. Contact his office for further details.
By delaying any proposal for revenue-raising for five years, and only asking for a proposal (rather than requiring some result), this section makes it unlikely anything will be done. If Congress were serious, this section would require that revenues be raised immediately. For example, Congress could state that $x must be raised over the next five years, starting in FY2009. Then, if by some miracle TARP breaks even (it will never happen), then those revenues could be used to help cover the hundreds of billions in other financial industry bailouts that occurred this year. But Congress is not serious, so this section should be deleted.
Unless there is clear agreed plan on how the 700B$ cost will be recouped, this bill should never be passed. I agree that the Tax rate for the Financial Industry must be increased in the coming years to recoup this bailout cost. Also careful regulation should be made to ensure that this extra cost will not be passed on to the consumers (borrowers) by these participating banks. I would say depending on the value of the assets sold by these banks their tax rates should be accordingly increased. Else, the cost is to be recouped from those bank's divident payments.