Earlier, my colleague Igor Volsky pointed out that, contrary to what some are saying, Scott Brown’s election in Massachusetts was not a referendum on national health care policy. But that’s not the only meme that is developing thanks to Brown’s victory.
Financial services lobbyists and Senate Republicans are also claiming that Brown’s win signifies voter rejection of President Obama’s plan to implement a bailout tax on the biggest financial firms in the country, which Brown outspokenly opposed:
— A senior Senate GOP aide: “Brown was against the bank tax, and despite a coordinated effort between the White House, OFA, DNC and the Coakley campaign (including the President’s weekly address and lots of ads), he won handily. If he was their test case, they’d better start over.”
— A top Wall Street official: “Seems to me to be a rejection of the Wall Street populism and tax plan as much as it is of health care. The administration put a new movie out two weeks ago with a negative, punitive tax message. Nobody showed up.”
— Keefe, Bruyette & Woods analyst Brian Gardner: “If Brown wins, we think one of the interpretations will be that opposition to the bank tax is not politically fatal.”
But more importantly, poll after poll shows that the knock on the Obama administration and Democrats in general is that they haven’t done enough to rein in banks, who are back to making sky-high profits while the rest of the economy is still in the doldrums. For instance, an ABC poll this week found that “nearly half of Americans (49 percent) think President Obama has done too much for banks and financial institutions, while just a third think he has done the right amount, and 9 percent think he has done too little.”
The latest Allstate/National Journal Heartland Monitor poll found that “40 percent of respondents said banks and investment companies benefited most from the government’s response to the economic crisis,” while just 17 percent said low- or middle-income Americans benefited the most. Likewise, a Bloomberg poll conducted last month found 50 percent disapprove of the President’s work “addressing problems in the financial industry on Wall Street.”
I think it would be an error of epic proportions for the administration or Democrats to read Brown’s win as a reason to abandon the bailout tax. There are good economic reasons for the tax (raising much needed revenue, evening the playing field a bit between large and small institutions, and acting as a counterweight to all the subsidies the banks are taking advantage of), and to think that letting Wall Street banks defeat yet another proposal will be a winning strategy seems horribly misguided.
Instead, they should go full steam ahead with the bailout tax and make Republicans put their money where their mouth is by voting against it. As Paul Krugman put it, “take on the banks — and force those who are covering for them into the open.” Not many Senate Republicans have openly opposed the bank tax (or talked about it at all, for that matter). There’s a reason for that.