Posted by Brad @ 2:07 pm on December 10th 2009

Government Not Going To Lose As Much Money As Expected; Reveals Plans To Spend Difference

I’m going to go ahead and steal Brad Warbiany’s headline for this one, because I can’t think of any better.

Lately, more good news has been coming in about TARP. It has appeared to become the consensus of bailout-recipients that being perceived as on the dole is bad for business, while freeing yourself from that particular government dime is a good way to project growth and stabilization. So unlike most of our fears here at the sight, the corporations are indeed repaying TARP money. That was one selling point of the plan that I think few of us believed.

The Obama administration plans to announce this week that it is slashing its estimate of the losses from the governmentís financial bailout package by about $200 billion, Treasury officials said.

The White House had projected in August that the $700 billion Troubled Assets Relief Program, or TARP, would lose about $341 billion over the next 10 years. But officials scaled back the estimate after once-shaky Wall Street firms began recovering much more quickly than expected. In addition, several TARP initiatives have been funded at a smaller amount than originally planned.

Since the TARP became law in October 2008, banks have paid dividends and interest of about $15 billion and returned aid worth a total of about $71 billion, a Treasury official said Monday. Last week, Bank of America said it would soon repay an additional $45 billion. Another $139 billion of TARP funds was never allocated to any programs.

Well, it’s not a total loss, at the very least. For once, the system appears to have wor…wait, hold on.

The new, more optimistic estimates of TARP losses could pave the way for Democrats to tap some of the programís unspent funds for a jobs bill currently being crafted in the House.

Wow. A better illustration of the way government thinks probably cannot be found.

So, losing money on TARP won’t be the business world screwing the system, but rather the government screwing the system. Its own system. The problem with TARP, it appears, was not that it benefited Wall Street fat cats or dying industries or inviting those nefarious free marketers to abuse the system…in fact, incentives by market pressure caused the marketeers to be pretty responsible, all things considered and about a thousand caveats applied. The forces over government? The opposite. A loan becomes an expenditure becomes an expenditure in perpetuity, and the incentives work to turn -$700 billion in the government deficit into +$700 billion in government budget.

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