January 14, 2009
When Henry Paulson went before Congress and asked for $700 billion to bailout Wall Street he also asked for and got unlimited power to implement any changes he saw fit. This little nod of the head from Congress gave Paulson more power than the President; and Paulson used that power. Before one dollar was distributed, he revoked a 22 year-old tax law, thereby giving banks a monstrous tax shelter for merging with or buying out other financial institutions, and allowing them to create shell companies in order to write off billions of dollars for tax purposes. The result is a windfall of $140 billion for banks.
Paulson hid the little 5-sentence notice deep in his proposal so as to obscure it from lawmakers reviewing the proposal. It was days later before anyone noticed it, and lawmakers would not revoke Paulson’s change for fear it would throw the financial market into a deeper tailspin and the entire system would collapse. Dozens of tax lawyers and other experts on law said Paulson had absolutely no authority to revoke the tax law, but he got away with it anyway. Naturally, some tax lawyers who worked for or represented banks said the change was legal, but could only point to the authority that Congress gave Paulson as its legitimacy.
Once again, fear tactics, coupled with slight of hand, are costing the American taxpayers billions of dollars. There is no way anyone could ever believe that Paulson did this because he thought it was an absolute necessity to make the bailout work; he did it for his friends. And you can bet President Bush was aware of it. As columnist Dan Froomkin said about the bailout itself “(it) features some distinctive characteristics of major Bush initiatives past: It would be spectacularly expensive, primarily benefit the very rich, and grant the executive branch unlimited power with no transparency or accountability”.
The tax law had been loathed by banks and financial institutions since its implementation and they have spent hundreds of millions of dollars lobbying to get the law repealed. But Congress had baulked on removing it because they knew it would be viewed by the public as yet another giveaway to big business, which is exactly what it would have been. So Paulson, being an ex-big banker himself, decided to seize upon the opportunity to “stroke” it away in the frenzy of fear, and while people were looking the other way. Henry Paulson, just like his boss, is a shyster with no morals who cares nothing for the American people and will stop at nothing to increase the wealth for his already wealthy friends.
What’s more amazing than what Paulson did is that almost none of the news media has reported on this, except for maybe a quick “oh, by-the-way” mention. This “news” is more than two months old, yet the media is still ignoring it. Why? The same old story; the news media is pro-business, and they are not going to report on any negative news that might actually do harm to their big business friends. The only place I have actually seen an in-depth report on this was from a Washington Post staff writer. With all the news outlets being pro-business/supply-sider entities, don’t expect anything more from them.