Obama weighs use of TARP funds for deficit, jobs
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President Obama said today that unspent funds from the federal bailout program could be used to cut the federal deficit, to lend to small businesses or to help pay to create more jobs.
Speaking to reporters after a meeting with Turkish Prime Minister Tayyip Erdogan, Obama said the $700-billion Troubled Asset Relief Program had funds that could be directed elsewhere. Obama will unveil his plans in a speech Tuesday on the economy.
TARP has turned out “much cheaper than we had expected, though not cheap,” Obama said in televised comments. The money could be used for deficit reduction or other plans consistent with the program’s overall goals such as helping small businesses with their credit needs or for a jobs program, the president said.
TARP was originally a $700-billion program to bail out banks hit hard by last year’s credit crunch. About $370 billion went out to the financial institutions.
But the companies have been able to return much of the money and in some cases even pay interest. The government last summer had projected that TARP would add $341 billion to the deficit, but has scaled that back to about $141 billion.
That frees up about $200 billion which could be used for a variety of purposes. Conservatives are pushing for the money to be used to cut the deficit while liberals want more money spent to create jobs and fight unemployment, now at 10% nationwide.
In his comments, Obama said the TARP program had succeeded in stabilizing the economic system but noted that small businesses were still not getting the loans they needed, perhaps a signal of his thinking to be explained on Tuesday.
“The question is, are there selective approaches that are consistent with the original goals of TARP -- for example making sure that small businesses are still getting lending -- that would be appropriate in accelerating job growth, and I will be addressing that tomorrow,” he said.
-- Michael Muskal
