It's bad enough that Congress okayed a $700 billion Wall Street bailout fund that ended up going to highly selective recipients.
It's even worse that as the money is being paid back into the treasury, President Obama wants to use it as a slush fund instead of paying down the enormous deficits he's run up:
Republicans accused President Obama on Tuesday of taking a step toward using the $700 billion Wall Street bailout as a slush fund, a possibility many worried about when the Troubled Asset Relief Program was first created during the economic panic of 2008.{....}
“Our TARP should not be a piggy bank. It was intended to stabilize the financial system. It has stabilized the financial system. As it is paid back with interest it should go to reduce the debt,” Sen. Judd Gregg, New Hampshire Republican and ranking member on the Senate Budget Committee, said in a brief interview.
Obama traveled to New Hampshire to promote his idea, a proposal to move $30 billion out of TARP and loan it to community banks, in order to spur lending to small businesses. Obama only touched on the idea during the town hall, but it drew fire from Republican lawmakers in Washington as well as some Democrats.
The president’s idea, which requires legislative action by Congress, would remove the $30 billion from the pot of money that is scheduled to be paid back to the $12. 4 trillion national debtthis fall, when TARP is scheduled to expire. A White House official confirmed to The Daily Caller that the money would no longer go toward paying down the debt if the president’s idea became law
Most of the largest TARP recipients have already paid back the money with interest, and Obama sees a cash cow to fund his favorite projects if he can get Congress to go along with it.
Out of the original $700 billion TARP funds, about $320 billion so far has been paid back or never was loaned out in the first place. That money could be put towards paying down our deficit immediately. Obama wants to siphon $30 billion or so off the top for his own projects.
Office of Management and Budget Director Peter Orszag was beaten up over this blatant misappropriation of funds by Senator Judd Gregg of New Hampshire, who's probably thankful these days that he followed his conscience and rejected becoming Obama's Commerce Secretary:
Office of Management and Budget Director Peter Orszag faced the wrath of Sen. Judd Gregg, R-N.H., Tuesday during the Senate Budget Committee hearing on the Obama administration’s budget proposal for 2011.
Gregg was irked about President Obama’s plan to unveil a new proposal to use $30 billion from Troubled Asset Relief Program funds to help community banks lend to small businesses at an event Tuesday afternoon in Nashua, NH – Gregg’s home state.
“This proposal violates the law,” Gregg said. “The whole concept of the TARP was as we recouped the money, we would use it to pay down the debt. Now that’s not going to happen. It’s become a piggy bank. A piggy bank which adds to our deficit.”
Though Orszag said he understood that it would take an act of Congress to change the current law, Gregg said the president was taking TARP money and using it for political purposes.
“Let me tell you what the law says,” Gregg said. “Let me read to you again because you don’t appear to understand the law. The law is very clear. The monies recouped from the TARP shall be paid into the general fund of the Treasury for the reduction of the public debt. It’s not for a piggy bank because you’re concerned about lending to small businesses and you want to get a political event, when you go out and make a speech in Nashua, New Hampshire. That’s not what this money is for.”
As opposed to Obama's bogus stimulus bill, the TARP legislation, passed during the waning days of the Bush Administration was always supposed to be a temporary fix, with the money being paid back into the treasury to pay down the deficit. That was it's main selling point.
What we're seeing here is yet another example of the Chicago Way, as Obama attempts to break the law and launder the funds for his own political benefit.
I think the expression "a broken clock is right twice a day" applies here. It is clear that they banks are not lending money right now. There are a number of small business owners who have GREAT projects in the pipleline that if completed would result in ENORMOUS profits. This would in turn result in MASSIVE tax revenues for the government. Unfortunately the banks, for whatever twisted reasons, WILL NOT lend the money even though the chances of loss are almost NON EXISTENT. I know some of these business owners.
ReplyDeleteIf this money will be used as Obama says it will be used and given to community banks and the community banks will lend the money to these deserving businesses then Mr. Obama is correct and Mr. Gregg is wrong. Many of the businesses are solid businesses who simply need a loan that they will pay back at reasonable interest rate to complete the projects and realize these profits. The profits from these businesses ventures will be taxed of course and the taxes will pay down the deficit at a much faster rate than simply using the tarp funds to pay down the deficit.
Of course if the community banks take the money and don't lend or it ends up being funneled into certain special interests that have dubious economic benefits then this is a bad idea.
Again, if the funds are really used to lend to small businesses then Mr. Obama is right and the Republicans are wrong. My suggestion to the Republicans would be to go along with the plan and insist on some sort of mechanism to ensure that the community banks who receive these funds actually lend the funds out to small businesses.
The projects that can't get funding becuase for what ever perverse reasons the banks haven't lent out the funds to bring them to fruition would be enormously profitable and would result in substantial tax revenues. In addition, the people who would be employed as a result of these projects might even be enough to end the recession.
Bottom line: Get the banks to lend again. I suppose if they are reporting record profits as it is then maybe there is no incentive to lend. Why take minimal risk when you can take no risk and still be profitable. If TARP funds are necessary to get the banks lending, then so be it.