The Obama administration repeatedly boasted how the rescue of Wall Street will cost taxpayers far less than originally expected. But the budget proposal released this week showed that the losses associated with the bailout are increasing. The largest reason for the increased bailout cost is that the federal government’s stock holdings of American International Group and General Motors both tumbled.
Consequently, the Obama administration said it will seek twice as much money ($61 billion vs. $30 billion) from its proposed bank tax. Those who would pay this increased “Wall Street” tax are crying foul. The tax would apply to banks with more than $50 billion in assets, even though these firms have generally repaid their bailouts to the Treasury with interest.
Taxpayers may lose far more money from General Motors, which is not subject to the tax. Fannie Mae and Freddie Mac will also not be subject to the bank tax, even though the Obama budget projects these two mortgage companies will cost the federal government a net of $148 billion between 2009 and 2013.