Taxpayers owed at least $237 billion from TARP
When surveying support for and opposition to government’s recent big-spending adventures, one finds a great variance in support for TARP vs. other efforts like the American Recovery and Relief Act (a.k.a. the $800 billion stimulus) and Obamacare. Simply put, you get a lot more people who are critical of the latter but accepting of the former. Some of this is surely due to partisan allegiances: the first TARP took place with a Republican in the White House, and thus will enjoy more support among some Republicans. Others have a principled belief that TARP was different from, say, the Stimulus, in that it was targeted specifically towards stabilizing the financial system, as opposed to simply injecting cash into the broader economy. And that difference certainly is noteworthy.
But a question remains: In hindsight, do we now believe that TARP was a net gain? The Obama administration generally holds that it was; however, a new report is calling all that into question.
The public, though, is left to focus on three questions that now matter: Was the money paid back? Did TARP turn a profit? Did the legislation stabilize the long-term health of the economy?
A new report to congress by Christy Romero, the Special Inspector General for the Troubled Asset Relief Program, says “no” on all fronts. Though the report asserts that TARP played an “active” role in the recovery (some of you may surely wonder “what recovery?”), it ends the myth that taxpayers turned a “profit” or were paid back by borrowers.
The pricetag on TARP is astronomical:
Even using this brand of inventive accounting, the report notes it is a “widely held misconception that TARP” is generating profit. “The most recent cost estimate for TARP is a loss of $60 billion. Taxpayers are still owed $118.5 billion (including $14 billion written off or otherwise lost),” the report calculates.
Though its tricky to track $700 billion of emergency funding that was haphazardly dropped into the economy by a panic-stricken government, when accounting for the Fannie Mae and Freddie Mac bailout, the American taxpayer is probably owed somewhere in neighborhood of $237.7 billion, though some estimates are far higher. And it will be more. The Treasury Department says that a large part of the money lost via TARP is the result of the housing and car bailouts, also not paid back. When the next Fannie and Freddie rescue comes – as a number of reports have indicated will be needed – taxpayers will be on the hook.
Certain industries have certainly benefitted from this massive infusion of taxpayer dollars. Unions and other allies of the Democrats have clearly benefitted. But the economy writ large, and the taxpayer—including taxpayers as yet unborn—do not appear to have gained much.
Ardently devoted to the cause of human freedom, he has worked at the confluence of politics, activism, and public policy for more than a decade. He co-wrote a ten-part series of video shorts on economics, and has film credits as a researcher on 11 political documentaries, including Citizens United's notorious film on Hillary Clinton that became the subject of a landmark Supreme Court decision. He is the founder of several activist endeavors, including AnyStreet.org (now a part of Western Free Press) and Liberatchik.com. He is currently the managing editor of and principal contributor to WesternFreePress.com.