Did bad tax policy help cause the economic meltdown? Former assistant Treasury Secretary for Tax Policy Pam Olson thinks so. Speaking at a Dec. 5 tax reform conference sponsored by TPC and Tax Analysts, Pam fingered what she called an “anti-equity and pro-leverage” Internal Revenue Code as one culprit in the collapsing credit markets. TPC’s Bill Gale agrees--after a fashion--although other tax experts are unconvinced.

The federal budget deficit has worsened over the past year as the economy collapsed into recession, Congress once again patched the alternative minimum tax (AMT), and the Treasury took steps to stabilize credit markets and rejuvenate the economy. Red ink drenches the federal budget for the foreseeable future.

The headlines today say Chrysler has asked Congress for a bridge loan of $7 billion on top of the $8.5 billion it already requested to subsidize development of fuel efficient cars. But it is not exactly Chrysler that is asking for the money. Rather it is its majority shareholder: the private equity firm Cerberus Capital Management. Thus I cannot help but wonder whether the true beneficiaries of this transaction will be Cerberus and its partners rather than Chrysler’s workers, suppliers, and dealers.