The jobs bill is going to happen. The House will likely pass a bill in December, and the Senate will match in January or February after the health care bill is done. Rather than "if" it will happen, the major questions for the jobs bill are how large it will be, what will be in the bill, and how the bill will be funded.
Relating to the latter, I recently had a chance to ask Representative Alan Grayson if there was any legal barrier to using the remaining Wall Street bailout money to fund the bill. He did not believe there was any such legal barrier, and indicated that political barriers would be more significant.
The lack of legal barriers is virtually self-evident. TARP funds have already been used for a variety of non-Wall Street related projects, including the auto bailout and assistance for struggling homeowners. Further, the Obama administration has said it is interested in using some of the funds to pay down the debt, and using others to increase lending to small businesses. Clearly, there is a lot of flexibility in how the money can be used.
House Democratic Caucus Chairman John Larson of Connecticut wants dough to fund job-creation legislation. Massachusetts Rep. Barney Frank, the powerful chairman of the House Financial Services Committee, wants to direct $2 billion of repaid Troubled Asset Relief Program funds to loans for unemployed homeowners so they can avoid foreclosure. House Speaker Nancy Pelosi of California admits that "there's a good bit of interest" in spreading the money around to various economic projects.
And Senate Democrats want to put a big chunk - say, $40 billion - toward loans to small businesses.
Even though the idea is growing in popularity, not everyone is on board. Still, the pushback against using TARP money to pay for the jobs bill is always based on political, rather than legal, concerns:
"As people on the Hill realize that there was money allocated and not spent, it becomes attractive. We need to find ways to make that less attractive," said a senior administration official.(...)
On Tuesday, Maffei was one of three Democrats on the House Financial Services Committee to vote in favor of a GOP amendment to force the sunset of TARP. Maffei said he's concerned that voters back home just aren't going to buy the notion that money used for unpopular bailouts of Wall Street firms and American automakers is suddenly going to help them.
"Branding matters," said Maffei, a former Hill communications director.
Using the remaining bailout money fund some, or all, of the new jobs bill is a political issue, not a legal one. Further, given that the jobs bill is largely a response to a deteriorating political environment for Democrats, the argument over using the money to pay for the jobs bill will also be political. On one side will be Democrats who believe that Americans would like to see the bailout money spent on Main Street, and on the other will be the Democrats who think that deficit reduction is more popular.
The end result will probably be that the remaining TARP money will be used both for deficit reduction and to partially fund the jobs bill. The struggle will be over getting as much of the TARP money to fund the jobs bill as possible.
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