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Bailout funds may be used for stimulus
Federal Reserve Chairman Ben Bernanke smiles as he addresses the Economic Club of Washington at a hotel in Washington, D.C.
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Kai Ryssdal: The TARP, the bank bailout, was budgeted last fall at $700 billion. A couple of months ago best guesses were taxpayers would lose about $240 billion on the deal. Well this coming Wednesday morning we are going to get a report from the Government Accountability Office that says, in fact, we're only going to lose about $40 billion. Do a little government accounting of your own, that means the White House just found $200 billion to spend. Marketplace's John Dimsdale reports.
JOHN DIMSDALE: Banks that got loans from the federal government are paying them back faster than expected. At a speech this afternoon, Fed Chairman Ben Bernanke was asked whether he thinks taxpayers would get their bailout money back.
BEN BERNANKE: Yes I do, I think we're in very good shape. In fact I do believe we're going to get back all the money and indeed we are going to be showing for the taxpayer fairly significant extra income.
Two-hundred-billion-dollars could make a hefty dent in the $1.5 trillion projected deficit this year. But House Democrats have their eye on some of that money to pay for another stimulus bill. Is that a good use of the money?
Deficit hawks, like Maya MacGuineas at the Committee for a Responsible Federal Budget, think not.
MAYA MACGUINEAS: The problem in Washington is that anytime something comes in better than expected, or a new money source opens up, it gets spent three ways instead of doing what we should be doing with it, which is repaying those funds.
But Democratic leaders, like Maryland Congressman Chris Van Hollen, say right now there are higher priorities than cutting the deficit.
CHRIS VAN HOLLEN: These are dollars that have been in part now repaid from Wall Street because the financial sector is recovering. And we think it's important some of that money be redirected to Main Street, where people are hurting, and there are a lot of people are out of work.
Democrats are proposing to divert about half the $200-billion windfall into infrastructure projects, tax breaks, and more unemployment benefits.
In Washington, I'm John Dimsdale for Marketplace.
Windfall? Strange math you seem to be using here. My homespun, NGO, learned-at-my-mother's-knee accounting indicates that if you went into the casino expecting to lose, say, $240, but ended up only losing $40 ... you still lost $40! You didn't "find" $200 you can bet at another casino ... you simply haven't lost your shirt, only your tie. Keep your shirt on ... and go back to the bank a little less poorer than you planned on being.
There are, and can be, no higher priorities than cutting the deficit and paying down the national debt. What Democratic leaders seem to forget is that this money, like all federal revenues, is "Main Street"'s money to begin with, and "Main Street" can make better use of it than the government can.
