Budgeting for TARP
There's been talk lately that the White House is going to use some of the remaining or returning TARP funds to cut the deficit. Amidst double-digit unemployment, this is a bit like a family buried beneath overdue debt deciding to save a big bonus for retirement. That pretty much remains true, but I also learned something interesting today: For the purposes of using TARP money for new purposes, a dollar is not a dollar.
Essentially, TARP is budgeted at the rate that it's expected to lose money, not the amount it's spending. If you've got $100 for TARP, and CBO expected half of that to be paid back, then for the purposes of the budget, you could only use $50 for whatever else you were doing. So when you hear that the administration is using X amount of TARP money to pay down the deficit, that doesn't mean the deficit is getting the full measure of those funds.
Now, that money should still be going to stimulus. Even discounted TARP funds represent a big pot of money for stemming job losses. But not as big a pot as some assume.
Posted by: bmull | December 2, 2009 3:46 PM | Report abuse
Posted by: msoja | December 2, 2009 4:49 PM | Report abuse
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