Good Luck: CBO says Dodd Bill will reduce deficit by $21BB over 10 years

Not that anyone should be surprised about this.  The Democrats seem to be rather good at twisting inputs to the CBO.  One thing the financial crisis should have taught us is that a model is only as good as the inputs.  And even then, they can be spectacularly wrong like it was for medicare costs and will be for the current health care legislation. 

Don't be fooled by this tax.  Basically, this is a government sponsored bankruptcy insurace.  There is no way that the premiums will cover the potential losses that this type of moral hazard creates.  Via Reuters:
The Democratic Senate financial reform bill would reduce the U.S. budget deficit by $21 billion over the next 10 years, according to a cost estimate by the Congressional Budget Office obtained by Reuters on Wednesday. 
The estimated reduction in the budget deficit over the 2011-2020 period stems largely from charging the financial industry assessments for a fund to liquidate large, troubled financial firms, the office said.

The bill authored by Senate Banking Committee Chairman Christopher Dodd is designed to ensure that no financial firm is too big to fail.


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