Obama Proposes Wall Street Tax

President Barack Obama announced today a proposal to levy charges on large financial firms that benefited either directly or indirectly from the Troubled Asset Relief Program (TARP).

According to the President, the objective of the new financial crisis responsibility fee will be to hold accountable those firms which helped create one of the greatest financial meltdowns in recent history, and to ensure that taxpayers don't bear the total cost of TARP.

"We want our money back, and we're gonna get it," said Obama.

The fee will apply to roughly 50 firms - most of which are major U.S. financial institutions - including insurance companies like AIG. The President is expected to name specific others when he submits his 2010 budget plan. The administration believes the fees will generate roughly $90 billion over the next ten years, almost enough to completely recoup the $117 billion worth of TARP money that has been issued so far.

In his announcement, Obama called for the fee to apply for a minimum of ten years, but warned that it could last longer if it fails to pay off TARP funds by then. The tax will not be applied to Fannie Mae or Freddie Mac, nor will it be levied solely on firms that accepted bailout money, according to senior administration officials.

Critics of the plan have questioned its fairness in recent days. Even the President's own Treasury Secretary, Timothy Geithner, suggested that big banks would pass the costs of a tax down to their customers. However, the administration has countered that argument by suggesting that firms slash executive bonuses as a means of breaking even.

Though Congress could take months to pass legislation, the plan is being received well by certain key Democrats. "I strongly support this proposal, and I am confident that the Committee on Ways and Means will be acting on it soon,” said Rep. Barney Frank (D-Mass.).

In fact, Rep. Peter Welch (D-Vt.) has already introduced a bill that would tax all bonuses in excess of $50,000. Revenues generated from the tax would fund a new direct lending program administered by the Small Business Administration (SBA).

Unemployment Rate Stays At 10%

The nation's unemployment rate remained at 10% as the economy shed 85,000 jobs in December, according to statistics released today by the Department of Labor. While jobs in temporary services and health care increased, the construction, manufacturing and wholesale trade industries all experienced job loss.

The December unemployment figures were slightly worse than most analysts had predicted.

There was one bright spot found in the report as 4,000 jobs were actually created in November, the first increase in roughly two years. However, critics of the current administration's attempts to get the economy back on track feel that more needs to be done.

"Democrats continue to advance a liberal agenda that is doing more harm than good. The policies of higher taxes, runaway spending, record debt and government takeovers, are having a chilling effect on jobs creators across the country...The American people have waited for more than two years for Washington to enact policies that will help create jobs and they can’t afford to wait any longer," said House Republican Conference Chairman Mike Pence (R-Ind.) in a statement released on Friday.

Liberals See Problems With Some Elements Of Senate Health Bill

As the House and Senate prepare to reconcile their two healthcare reform bills, it is becoming clear that big compromises will need to take place.

While a pair of key Senate Democrats, Max Baucus (Mont.) and Chris Dodd (Conn.) met with President Barack Obama today to no doubt try and win support for their bill from the White House, supporters of the House version waged arguments against the Senate bill.

“There’s a real danger in the Senate plan that many working families needing health care will be forced to cut back...if the excise tax is imposed,” said former Clinton administration Labor Secretary Robert Reich referring to a proposal in the bill that would impose a 40 percent excise tax on the cost of individual insurance policies above $8,500 and on family policies above $23,000. Such cost-heavy plans are often referred to as ‘Cadillac’ plans.

“The notion that there are somehow ‘Cadillac’ plans out there...is a misnomer,” said Reich.

However, after meeting with House Democrats on Wednesday, it appears that the President favors urging them to remove provisions that would generate revenue through taxes on wealthy Americans in favor of adopting the Senate’s proposal.

Perhaps not willing to reveal her frustration over being asked to make concessions, House Speaker Nancy Pelosi sounded upbeat following the meeting.

“I think we’re very close to reconciliation, respectful of the challenges...the truth is that there is so much agreement in the bills but sometimes we approach the issue differently,” she said.

Supporters of the House bill also want the Senate to remove a loophole they say would allow insurance companies to charge higher rates to customers who posses pre-existing medical conditions.

“The Senate loophole will allow insurers to charge thousands of dollars more to people who have chronic conditions, to people who participate in a wellness program, but aren’t able to show a level of results that the insurance companies demand,” said Richard Kirsch with the organization Healthcare For America Now.

That provision, according to Sue Nelson with the American Heart Association, was inserted into the Senate bill by Sen. John Ensign (R-Nev.) during markup in the Finance Committee.

In an email to TRNS, a member of Ensign's staff responded by saying "Sen. Ensign believes that we need to do everything we can to encourage individuals to engage in healthy decision-making." The staff member referred to his amendment to promote employer-based wellness programs as "a reward-based OPTION, not a punishment system."

Health Spending Growth Rate Hit All-Time Low In 2008

National health spending grew 4.4% to reach a total of $2.3 trillion in 2008, according to new data released by officials with the Centers for Medicare and Medicaid Services (CMS).

However, compared to 2007, when the growth rate for health spending was 6%, the figure for 2008 was significantly lower. CMS officials attributed the slow down to after-effects of the struggling economy.

“During periods of recession we often see healthcare spending to be somewhat insulated from the impacts of that recession...but in 2008 we saw...a more immediate impact on the healthcare spending trend...most likely due to the fact that this recession is one of the most severe that we’ve seen since 1933,” said CMS statistician Micah Hartman.

In 2008, while state health spending decreased noticeably, federal health spending accounted for over one-third of total U.S. health spending, caused mainly by an 8.6% growth in Medicare. In addition, federal Medicaid spending grew 8.4%, sparked by a 2.6% increase in enrollment. These occurances were likely aided by passage of the American Recovery and Reinvestment Act, which allowed billions in health spending to be shifted from states to the federal government.

Due to a decline in private health insurance enrollment, the growth rate of private health spending slowed to 2.6% in 2008. Private health insurance plans lost roughly one million enrollees as a result of income and job loss. This in turn, sparked a slow down in the growth rate of private health premiums, which fell from 4.4% in 2007 to 3.1% in 2008.

Prescription drug spending also experienced a drop in growth, going from 4.5% in 2007 to 3.2% in 2008. Aside from the recession, cheaper generic drug prices offered by retailers such as Walmart contributed to the decline.

For Democrats, Uncertainty Surrounds Timeline Regarding Signing Of Health Legislation

While speaking to reporters following a series of crucial procedural votes on Wednesday, Sen. Tom Harkin (D-Iowa) was asked when he thinks President Barack Obama will sign a final healthcare bill into law.

“I bet we’ll get it done before the end of January,” replied Harkin.

Just a few yards down the hall, Connecticut Democrat Chris Dodd (D) was asked the same question. His response was slightly more non-committal.

“I wouldn’t use that as my benchmark,” Dodd said, referring to the date on which the President will deliver his State of the Union speech.

Though an exact date has yet to be confirmed, the speech will most likely take place either on January 26 or February 2.

As for whether or not Obama and those around him will play a role in helping the Senate and the House reconcile their two bills, Harkin said he believes that will be the case.

“The White House will be involved,” he said.