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Bailout is running out of money
Treasury Secretary Henry Paulson
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Steve Chiotakis: There is an update coming later today from Treasury Secretary Henry Paulson on the government's financial rescue efforts. Seems a good chunk -- like half -- of the money's already gone. And Paulson's going back to Congress for more. That was the original deal, but some lawmakers aren't happy about the spending spree so far. Here's Marketplace's Nancy Marshall Genzer.
Nancy Marshall Genzer: Congress gave Treasury Secretary Paulson the first half of the $700 billion bailout package with few strings attached. But lawmakers need to approve the second half.
And many do not approve of the way Paulson has been spending the money. They don't think enough is making its way into loans for consumers and small businesses. And congressional leaders have joined Michigan lawmakers in asking Paulson to use some of the money to help the auto industry.
Congressman Sander Levin is a Michigan Democrat:
Sander Levin: We have to act in November in terms of the auto industry. It can't wait.
Congress could amend the bailout bill to force Paulson's hand. But University of Texas law professor Henry Hu expects Congress to green light the rest of the cash, with or without changes.
Henry Hu: Nobody wants to be seen to be increasing the risk of some kind of economic Armageddon.
Adding to the pressure? No one's sure about the proper role of government during an economic crisis.
In Washington, I'm Nancy Marshall Genzer for Marketplace.
Running out of money? Duh? This crisis started as a "containable" sub-prime problem last summer. It accelerated into the financial meltdown in fall. I have a vague feeling that because of all the knee-jerk bailouts it will quickly morph into a fiscal and monetary monster next year.
For decades now, America has been fed the thought that government intervention is bad. My guess is that too many of the people with the ability to lessen the impact of the crisis are afraid to give the government a larger say in how the money is spent.
An additional problem is the perception that things will change quickly. The crisis has been building for many years in several areas of the economy. It is distasteful to think we may be years in trying to recover.
And now this Dow Jones story. Has Paulson become a jealous whiner also?
"Meanwhile, Paulson said Treasury's initial idea to purchase firms' illiquid assets doesn't seem like it would be that effective.
"Our assessment at this time is that this is not the most effective way to use TARP funds, but we will continue to examine whether targeted forms of asset purchase can play a useful role, relative to other potential uses of TARP resources, in helping to strengthen our financial system and support lending," he said, according to his prepared remarks."
I recall when Marketplace ran a piece on how anyone opposed to the Treasury Slush Fund was a revenge seeking whiner. Those were the good old days.
It is too bad NPR didnn't have a larger stable of economically literate people to call on a couple months ago. NPR, and its listeners, might not be playing catch up.
