When the Senate Banking Committee’s financial regulatory reform bill finally came up for a vote on the Senate floor, after the inevitable Republican filibuster was dispensed with, four Republicans cast their vote in support of the legislation — Sens. Olympia Snowe (R-ME), Susan Collins (R-ME), Scott Brown (R-MA) and Chuck Grassley (R-IA).
Today, Brown said that he will vote against the final bill produced by the House-Senate conference committee (despite the inclusion of an special deal that he personally sought) because it imposes a $19 billion fee on the biggest financial firms to cover the cost of the law’s implementation. And now Snowe and Collins are singing a similar tune:
COLLINS: I’m not happy with the $19 billion new fee or tax that would be imposed. It was not part of either the House or Senate bill. It was added in the wee hours of the morning.
SNOWE: Well, obviously I’m concerned, anytime you’re placing taxes in the legislation that was not in the Senate bill. I’m going to have a discussion with Sen. Dodd on some of these issues.
It’s not only in the Senate that this tiny levy has become the object of scorn. “The imposition of a job-killing tax on large financial institutions to create a $19 billion slush fund to finance future bailouts is nothing short of bleeding this economy in the midst of the worse recession in 25 years,” said Rep. Mike Pence (R-IN).
As Dean Baker, co-director of the Center for Economic and Policy Research, pointed out, “the fee is approximately equal to 0.01 percent of projected GDP over the next decade.” To derail legislation aimed at correcting the deficiencies that led to an economic meltdown because of a fee that will hardly be a blip on the radar of the biggest banks seems foolhardy, especially considering that Maine’s banking system is largely composed of smaller institutions that won’t be affected by the fee.
Rep. Barney Frank (D-MA), who chaired the financial reform conference committee, challenged the Republican hold-outs to find some other way to pay for the bill, if they don’t want to use a bank fee. “Do they want to add to the deficit?” he asked. “Is there another way? What’s their other way?”
As the Economist’s Ryan Avent put it, opposition to the fee also has implications for the debate over addressing the deficit. “The most moderate Republicans in the Senate are balking at the charge. Not because they disagree in any real sense with the economics of the fee. They simply won’t vote for anything that looks like a tax. This is why it’s so difficult to imagine a solution to America’s long-run budget crisis,” he wrote.