As posted last night in Quick Hits by Daniel de Groot, the Obama administration want to use leftover TARP funds to pay down the debt. I guess the idea is that China's economy needs more stimulating than our own:
The Obama administration, under pressure to show it is serious about tackling the budget deficit, is seizing on an unusual target to showcase fiscal responsibility: the $700 billion financial rescue.(...)
The Treasury Department said about $210 billion in TARP funds remains unspent, including about $70 billion returned from financial institutions. A further $50 billion is expected to be repaid in the next 12 to 18 months.
This is a terrible, terrible idea. There are times when paying down the debt is prudent--like the early part of this decade--but right now we need that money to create jobs. Immediately.
Paying down the debt now would just send the $210 billion left in the TARP funds to China and other countries to who we owe money. A much better use would be for it fund a $200 billion jobs package that Congress is looking to move over the next one to three months.
Unfortunately, the administration's idea of using the remaining bailout money to pay down the debt is already catching on with Blue Dogs and Republicans. Anti-health care, pro-coathanger, Representative Larry Kissell has introduced, and is gathering cosponsors for, a bill in Congress to match the Obama administration's plans. Here is a Dear Colleague letter he is circulating in the House right now, trying to gather more co-sponsors on top of the four Republicans, four Blue Dogs, and freshman Ann Kirkpatrick who have already joined up:
(The letter Kissell is sending to other House members can be found in the extended entry.)
When the first allocation of hundreds of billions of TARP dollars was used to buy preferred stock in hundreds of financial institutions, our constituents were assured this was necessary in order to free up lines of credit for everyday Americans who needed to buy a car, a home, or pay their bills. Instead these banks horded the funds rather than put them out on Main Street as available credit. Many continued to award obscene bonuses to their executives in order to "retain" their expertise. Meanwhile, those everyday Americans who were assured their tax dollars were going to a good cause have continued their struggle to get a small loan or a credit card.
I was not in Congress when the first half of TARP funds were voted on but I joined a majority of my colleagues in opposing the second half of funds. Due to the initial lack of oversight and accountability, TARP has been a mismanaged program from the beginning. Furthermore, Americans were sold on the promise that revenues from the sale or return of TARP related assets would be applied toward the public debt. What the American people were not told was that as long as the U.S. is running a deficit, the revenues from TARP related funds would simply return into the Treasury's general fund. That is why I introduced H.R. 3020, the "Repaying the American Taxpayer Act of 2009."
Specifically, H.R. 3020 would amend the Emergency Economic Stabilization Act to require revenue from the sale of TARP related assets to be directly paid toward the national debt while simultaneously reducing the debt ceiling for every dollar of TARP money returning to Treasury. Only by lowering the debt ceiling accordingly can Congress truly prevent Treasury from turning around and immediately borrowing more money. This bill would also insert language requiring that dividend payments received off the preferred stock the government owns in public companies be treated under the same rules. Finally, this bill would require the Special Inspector General for TARP (SIGTARP) to include in the SIGTARP Quarterly Report to Congress, a section outlining confirmation of these transactions and subsequent lowering of the debt ceiling. I understand enactment of this bill may require Treasury to return to Congress earlier to ask that the debt ceiling be raised; however, I believe money for the purchase of TARP related assets was money that never should have been borrowed in the first place. Accordingly, it shouldn't be treated as revenue when it returns to the Treasury's general fund.
If you would like to cosponsor this bill, please contact XXXXXX at XXXXXX or via email at XXXXXXXX. I look forward to your support.
Sincerely,
Larry Kissell
Member of Congress
Yeah, that's right, support hardworking Americans by sending their tax money to China, instead of to create jobs. Good friggin' plan.
And that's not all! In the extended entry, I discuss how the White House is pushing for either spending freezes or massive cuts next year, because apparently they are more concerned with avoiding labels than with actually creating jobs. More in the extended entry
Combined with proposed spending freezes and / or cuts, using the remaining bailout money to pay down the debt would be a disastrous move by an administration more concerned with avoid labels than anything else:
The White House is in the early stages of considering what bigger moves it might make for next year's budget. The Office of Management and Budget has asked all cabinet agencies, except defense and veterans affairs, to prepare two budget proposals for fiscal 2011, which begins Oct 1, 2010. One would freeze spending at current levels. The other would cut spending by 5%.(...)
White House Chief of Staff Rahm Emanuel is pressing for substantial spending cuts to go with any tax increases to try to avoid the "tax and spend" label that has bedeviled Democrats, according to administration and congressional officials.
Avoiding labels will not help Democrats at the ballot box one iota. Only stimulating our economy and creating jobs will do that. FDR and Democrats did not win landslide victories in 1934 and 1936 by engaging in a Hoover-like attempt to freeze spending and pay down the debt during a time of crisis. They spent, and spent big--resulting in Asian Tiger-like a GDP growth of 10.9% in 1934, 8.9% in 1935, and 13.0% in 1936.
If you want to know why Democrats and FDR did so well in 1934 and 1936, it is because they delivered results. Huge, huge GDP growth. the Obama administration and Congressional Democrats are not delivering anything close to that.
This is more than a fight over another piece of legislation. Determining what to do with the leftover TARP funds is going to be a fight for the survival of not only our economy, but of the political future of the Democratic Party. The remaining $210 billion in TARP needs to be spent to fund a $210 billion jobs bill, or else the entire party goes down in flames as the result of meager job growth next year.
Don't repay Chinese bankers with the $210 billion. Give Americans jobs.
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