TARP, after making bailout a dirty word, comes to an end Oct. 3
The Troubled Asset Relief Program (TARP) ends Oct. 3 after accomplishing its specific objectives and costing less than originally predicted. But TARP became a symbol of big government and made “bailout” a dirty word wielded by Republicans to score political points. The fact that TARP saved Wall Street, automakers and insurance giants, yet failed to perceptibly help ordinary Americans has Democrats on the defensive over a policy enacted by the previous Republican administration.
The true cost of TARP
TARP will stop extending loans Sunday, but it will continue to collect dividends and repayments. Fortune at CNN reports that it’s been two years since Congress gave $700 billion to the Treasury Department to prevent an economic collapse. The economy is limping along, Wall Street has resumed pillaging, and TARP’s final bill is much less than originally thought. According to the Treasury, the government only lent $386 billion of the fund. That money is coming back to the government at a much higher rate than expected. This week Treasury secretary Tim Geithner said he expected the total cost of TARP to be less than $50 billion.
The toxic backlash of TARP
The Washington Post reports that the TARP money spent is a fraction of what the government allocated to save the financial system. The Treasury and the Federal Reserve have spent more than $1.5 trillion to keep the mortgage and housing markets from melting down entirely. The bailouts have also embedded the federal government deeply into the private sector. As a result, political extremists are painting economic rescue as a socialist takeover.
The twisted politics of TARP
TARP, despite meeting its intended results at a discount, has put Democrats on the spot for defending a program that was the product of the Bush administration. ABC News reports that Republicans are hoping to take advantage of TARP’s unpopularity by linking Democrats and President Obama to “bailout,” which has become the dirtiest word in politics. For example, at a press conference Aug. 10, House Republicans used the word at least seven times while badmouthing a $26 billion state fiscal aid package moving through Congress. The Republican “Pledge to America” vowed permanently to end the program, even though it has expired already on its own.