On March 1, unless something happens inside the Beltway that has not happened in the past five years — compromise and cooperation, President Obama will officially order the “sequestration” — an across-the-board set of budget cuts totaling $1.2 trillion from defense and non-defense spending over the course of the next 10 years.
The funny thing is that as the president paints these cuts as all doom and gloom, and asserts that the sequester could severely harm the economy at the federal, state and local levels, what he and mainstream media outlets fail to mention, is that the sequester cuts this year will be less than what taxpayers are giving away for free to the largest 10 banks in America. That is correct, American taxpayers give big banks more money than the cuts that are being requested in the sequester.
Last week, in an article published in Bloomberg by their editors reported that “the 10 biggest banks get an effective annual subsidy of $83 billion from taxpayers, and that almost all their recent profits are subsidized by the federal government.”
The number quoted by Bloomberg came from figures produced by Kenichi Ueda of the International Monetary Fund and Beatrice Weder di Mauro of the University of Mainz, who estimated that “the value of that too-big-to-fail subsidy at about 0.8 percentage point. We multiplied that number by the top 10 U.S. banks’ total liabilities to come up with $83 billion a year.”
This is all extremely strange, seeing that the president keeps talking about how damaging these cuts will be to Americans at a time when he annually gives banks just as much money and when the U.S. banking industry in 2012 recorded its highest earnings since before the 2007-2009 financial crisis, according to data released on Tuesday by the Federal Deposit Insurance Corp.
According to the FDIC, the banking industry’s full-year earnings were the second-highest on record at $141.3 billion, an increase over 2011 of $22.9 billion, or 19.3 percent.