Obama's Big-Bank Tax

President Obama rolled out his much anticipated big-bank tax today, dubbed the "Financial Crisis Responsibility Fee." The fee will go into effect on June 30, and the White House projects the tax to generate $90 billion over 10 years and $117 billion over 12 years—but either way, the tax won't go away until the TARP bailout money for these big institutions is repaid in full. It'll apply to the largest financial institutions—technically, those with more than $50 billion in consolidated assets—and that includes bank-holding companies (i.e., Goldman Sachs), thrifts, and insurance companies (i.e., AIG). Not subject to the tax are Fannie Mae and Freddie Mac and the US automakers, even they all received more than generous rescue packages from the government.

Not surprisingly, Wall Street is clearly pissed at this oh-so-subtly named fee. In announcing it today, Obama responded to the financial sector's criticism with a direct message to Wall Street executives. "Instead of sending a phalanx of lobbyists to fight this proposal or employing an army of lawyers and accountants to help evade the fee," he said, "I suggest you might want to consider simply meeting your responsibilities." Fat chance of that. The head of the Financial Services Roundtable, one of the biggest coalitions of financial interests that frequently lobbies on financial issues on Capitol Hill, already came out swinging, calling the tax a "strictly political" move.

So what? From a political standpoint, Obama's record so far has been so skewed in favor of Wall Street and the financial industry, while taxpayer-directed efforts like the Making Home Affordable program have floundered and done little to abate the foreclosure crisis (which, mind you, remained at record levels in 2009 and is only getting worse in 2010), that it's about time Obama took a political stand that suggested otherwise.

That said, the tax does smell of an ad hoc solution, and feels like a move intended more to pacify anger toward Wall Street's "fat cats" and their bonuses and bailouts than to recoup bailout money. I also fear that the cost of the tax could be passed along to consumers, who are supposed to be the winners in this deal. Matt Yglesias says if that's the case, then consumers will simply spend less and take their money elsewhere; my only fear with that, however, is that if most of the big supermarket banks are included here, there aren't many options for consumers who want to take their business to another bank, unless they're willing to move to a smaller, probably regional bank. Which perhaps isn't so bad after all.

The tax, to be sure, is no substitute for better capital requirements and more rigorous regulation, and it shouldn't distract anyone from the more important goal of passing tough, smart financial regulation this year.

Fiore Cartoon: Gay Marriage

According to conservatives, gay couples who want to get hitched are a threat to traditional marriage(!) You know, like  straight couples who cheat or get a divorce.

Watch satirist Mark Fiore take on the fallacies of Prop 8 advocacy below:

As the big banks gear up to fight President Barack Obama's proposed "financial crisis responsibility fee," it's worth taking a look at some of the behavior that got us here. Dean Baker offers a great example—Goldman Sachs' bets against the financial products it was selling:

The basic story is that a [collateralized debt obligation, or CDO] is a pile of assets of different types. It can include parts of mortgage backed securities, parts of other types of securities and just about anything else that the issuer chooses. Goldman knows exactly what it threw into the CDO, the insurer (AIG in this case) only knows the information that is publicly available and what Goldman might chose to tell them.

When Goldman offers to buy a [credit default swap, or CDS] from AIG on its CDO, it is either throwing its money away, in the event the CDO is good or it is expecting to make money because it knows the CDO is bad. If you were AIG, what would you think? (btw, note that Goldman was not insuring an interest or "hedging" in any way. It sold the CDO, it didn't buy it, and therefore had no interest in it.)

Let me break this down for you. Too extend a metaphor that Phil Angelides, the chair of the Financial Crisis Inquiry Commission, used yesterday, think of Goldman as a used car salesman. Goldman knows there's a good chance that the cars it is selling are going to break down after 1,000 miles. But its customers have no easy way of figuring that out.

Here's the rub: in real life, a sketchy used car salesman can't take out an insurance policy that pays out if a car he's already sold breaks down. But that's effectively what Goldman can do with a CDS. It's the financial equivalent of buying homeowners' insurance on the house you just sold to your neighbors and then burning the house down.

So for Goldman Sachs, the best move was obvious: Sell as many lemony cars as possible, buy insurance on all of them (knowing they'll probably break down), and collect both the sale price of the car and the insurance payout!

A MQ-1B Predator aircraft takes off on June 12, 2008. If you hear a Predator hovering above you in Pakistan, you're probably in for a very bad day. (U.S. Air Force photo by Senior Airman Julianne Showalter/Released)A MQ-1B Predator aircraft takes off in Iraq. If you hear a Predator hovering above you in Pakistan, you're probably in for a very bad day. (U.S. Air Force photo by Senior Airman Julianne Showalter.)Just where in the Constitution and laws of the United States does President Obama locate the power to have people in nominally friendly countries blown up by our armies of flying robots? On Wednesday, spurred on by reports of the increasing use of drone strikes against suspected terrorists in Pakistan (and corresponding reports of increased civilian casaulties), the American Civil Liberties Union filed a Freedom of Information Act (FOIA) request (PDF) seeking information about the government's legal justifications for its drone program. In a post on the ACLU's "Blog of Rights," Jonathan Manes explains why the ACLU is doing this:

The use of unmanned drones to target and kill individuals is a profoundly new way of waging war. For the first time, military and intelligence officers can observe, track, and launch missiles at targeted individuals from control centers located thousands of miles away, without any significant U.S. presence on the ground. The technology also permits the United States to target individuals nearly anywhere in the world....

The ACLU believes that the use and proliferation of this tactic must be the subject of public scrutiny and debate. But the government has released essentially no information about the legal basis of and limits on the drone program, or its scope and consequences. The public has been kept in the dark and is therefore unable to assess the wisdom or legality of the strikes. Commentators on all sides agree that these are not questions that should be decided solely by technocrats behind closed doors.

In order to fill this void, the ACLU is asking the government to release basic information about its use of drones to execute targeted killings.

This seems like an eminently reasonable request that can be mostly complied with without violating national security. We'll see what the Obama adminstration thinks.

A UH-60 Black Hawk helicopter swiftly departs the flight line during dusk on Camp Taji, Iraq, Jan. 11, 2010. The helicopter is assigned to the 1st Cavalry Division's 1st Air Cavalry Brigade, which conducts aviation operations 24 hours a day, seven days a week, to support US and Iraqi forces. (US Army photo by Sgt. Travis Zielinski.)

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When Barack Obama won the election in November 2008, one question was, what will he do with his army? His ultra-wired campaign had attracted over 13 million volunteers and donors plugged into Obama HQ via email and text messages. The future of this grassroots movement had to be decided, and eventually—perhaps too slowly—Obama for America (the campaign entity) morphed into Organizing for America and became an arm of the Democratic Party. And among the politerati, there's been much discussion over the past year whether Obama has made the best possible use of his supporters through OFA.

TechPresident.com, a "crosspartisan group blog" that explores how government and politicians use the Internet, commissioned journalist Ari Melber to evaluate OFA. In a 73-page report, Melber notes that the outfit "successfully mobilized...a new corps of super-activists" during 2009, mostly regarding health care reform. But he reports that congressional aides do not consider OFA "a major or powerful force on Capitol Hill." He writes: "In 2009, OFA focused more on supporting and thanking allied Members than pressuring resistant Democrats or Republicans." That sure makes OFA seem a tad wimpy.

The most intriguing part of Melber's report is the section featuring the comments of former Obama campaign staffers. They are quoted anonymously, but a powerful theme emerges: the Obama White House is not as interested in grassroots action as the Obama campaign was. Melber reports:

During a trip to Afghanistan this week, Sen. Carl Levin (D-Mich.), the chairman of the Armed Services Committee and a skeptic of the president's troop surge, says he saw a number of positive signs. Speaking to reporters via conference call from Dubai, where he was awaiting a flight back to Washington, Levin said he saw "real partnering going on" between coalition and Afghan forces, sensed "a significant increase in optimism about the possibility of success," and believed the military's "counterinsurgency strategy is taking hold." According to Levin, Lt. Gen. William Caldwell, who's in charge of the effort to train the Afghan army and police, told him that President's Obama's deadline for transitioning US forces out of Afghanistan had provoked an immediate and "stunning" response from Afghan leaders.

That had a very positive effect on the Afghan leadership and focused their energies on, for instance, obtaining a larger number of recruits for their army... It was such a large increase that they couldn't even handle them physically... Gen. Caldwell was very clear that the reason that happened was because the Afghan leaders realized that President Obama was serious and meant business when he said that the commitment here is not open-ended.

The American Farm Bureau Federation—the powerful agricultural lobby group already waging war on congressional efforts to fight climate change—yesterday adopted a formal resolution condemning both pending cap-and-trade legislation and the Environmental Protection Agency's anticipated regulations of carbon emissions.

The resolution, approved at the AFB's annual meeting, "strongly opposes" cap-and-trade legislation in Congress and "strongly supports any legislative action that would suspend EPA's authority to regulate greenhouse gases under the Clean Air Act."

The resolution also refers to the "ClimateGate" hacked email controversy as evidence of "just how unsettled the science really is on climate change." It also argues that the emails demonstrate the "unwillingness of many of the world’s climatologists to share data or even entertain opposing viewpoints." Yet the vast majority of climatologists estimate that agriculture is one of the industries that will suffer most from warming global temperatures.

Meanwhile, the US Department of Agriculture estimates that, under the climate legislation passed in the House last year, farmers will receive an additional $75 million to 100 million each year from 2012 to 2016 to reduce their emissions. The market for offsets created by the bill could also generate income for farmers of $1 billion per year between 2015 and 2020, and $15 to 20 billion annually from 2040 to 2050.

AFB's resolution was unanimously approved by the 369 delegates at the AFB's annual summit. The full resolution is below the jump.

Caitlin Flanagan's new hit piece in The Atlantic suggests that school gardens are no more than modern-day sharecropping programs, shuttling Hispanic youth to migrant labor rather than higher education and academic excellence. The ever-incendiary mouthpiece of the reactionary does get some things right: It's true that Alice Waters' cachet—she's close with the Clintons, Prince Charles has toured the grounds of her Edible Schoolyard—has meant school gardens have gained in resources, in visibility, and in coverage exponentially since the 90s. Also true that Waters takes a "foodie first" approach, she wants kids to learn about food, but not just any food, foie gras on every plate is more like it, which isn't all that practical and replicable (the latter my point, not Flanagan's). She also points to the rapid rise of school garden programs even in the face of dwindling state budgets, a result of gardens being buoyed financially for their obesity-fighting, nutrition-teaching features. (This is true, but much of this funding comes from foundations, so it's not like schools are cutting history classes to buy garden hoes.)

On the whole, like in many of Flanagan's pieces, she's more inflammatory than thoughtful, or even evidence-based. She points to the fact that kids in California schools are floundering, and to the fact that gardens are on the upswing, and concludes that gardens do kids no favors when it comes to prepping them to step out of serfdom. She distills the "fad" down to a simple question, wondering how gardens will make kids smarter: