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.
By
Ezra Klein
|
December 2, 2009; 2:56 PM ET
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Budget
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Posted by: bmull | December 2, 2009 3:46 PM | Report abuse
--"[T]his is a bit like a family buried beneath overdue debt deciding to save a big bonus for retirement."--
That's nonsense, Klein. Retiring unspent TARP funds is akin to not putting that next big purchase on one's credit card. In other words, it's prudent.
The rest of what you "learned" is hogwash, likewise.
Would you care if it occurred to you that the WaPo wasn't getting its money's worth out of you?
Posted by: msoja | December 2, 2009 4:49 PM | Report abuse
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I don't know that I'd be re-allocating that TARP money just yet. TBTF banks are raking it in of course but regional banks are still in big trouble. A double dip recession could tip a lot more of them over the edge and would also be a disaster for the auto industry.