Tuesday, November 30, 2010

Your TARP's got a little Wessonality

How is the Troubled Asset Relief Program (TARP) like Wesson oil? It's all coming back except for one tablespoon.

In its latest report on the TARP, the Congressional Budget Office (CBO) estimates that the eventual cost will only be $25 billion.

So far, the program has disbursed $389 billion, and when all is said and done, that total will rise to $433 billion. Both of these figures are far less than the original $700 billion authorization.

To date, the program has been repaid $216 billion. Much of the remaining expenditures were used to purchase assets that will eventually be resold to make up nearly all of the remaining amount.

The CBO analysis only accounts for the direct, anticipated financial costs of the program and does not include government revenues that were saved when the economy was kept from imploding. Similarly, it omits the wider benefits to the economy from those same actions.

For instance, the Center for Automotive Research estimate that the $80 billion in TARP expenditures that went to GM and Chrystler saved the economy approximately $100 billion in further income losses.

The record is all the more remarkable given the rocky start of the program. Recall that the Bush administration requested the original $700 billion authorization and got Congressional approval late in its term (Oct. 2008) but then almost immediately decided not to use the funds for their original purpose--buying troubled assets. A substantial portion of the program was handed off to the Obama administration during its transition, and the new administration, in turn, had to contend with the sideshow over executive pay at the banks that had been assisted.

The TARP continues to fry up the Party of No and their Tea Party crybabies. Ultimately, though, the program is turning out to be better than it was cooked up to be--except perhaps for one $25 billion tablespoon.

Wednesday, November 24, 2010

That didn't take long

The Washington Post reports
Only three days after GOP senators and senators-elect renounced earmarks, Arizona Sen. Jon Kyl, the No. 2 Senate Republican, got himself a whopping $200 million to settle an Arizona Indian tribe's water rights claim against the government.

Thursday, November 18, 2010

The quick bankruptcy of the automakers saved more than a million jobs

As the Federal government recovered nearly half of its emergency investment in General Motors yesterday, the Center for Automotive Research reported that the Obama administration's actions saved more than one million jobs in 2009 and just over 300,000 jobs in 2010.
Government assistance to General Motors and Chrysler enabled orderly bankruptcy proceedings and led to the saving of more than 1.14 million jobs in 2009 alone, according to a recently released Research Memorandum published by the Center for Automotive Research, (CAR), an Ann Arbor-based nonprofit research organization. The memorandum examines the magnitude of the economic impact of the U.S. policy to provide aid to the auto industry in 2008 and 2009 and weighs the public and private benefits against the public cost.
In addition, the administration's actions helped to avoid about $29 billion in other revenue losses that would have occured, lowering the net cost to the treasury.

The two unattractive choices at the time were quick government-financed and negotiated bankruptcies for GM and Chrystler or longer, drawn-out private bankruptcies. The CAR analysis compares these scenarios.

President Bush (the "great decider") punted the choice to the Obama administration. The Bush administration provided a temporary bail-out but did not make any of the wrenching choices regarding longer term support or restructuring.

Despite the assistance from the government, the restructuring was painful. Jobs and dealerships were lost. GM and Chrystler stockholders were wiped out. The analysis shows, however, that the outcome could have been more than a million jobs and nearly $100 billion dollars worse.

The Obama administration's tough decision was the right one, helping to avoid enormous additional job and income losses, while setting the stage for the automakers' eventual recovery.

Thursday, November 11, 2010

What will be the Party of No's objection now?

A substantial majority of Americans--70 percent according to a May Gallup poll--reject continued discrimination against openly gay and lesbian service members. The President, his Republican Secretary of Defense, and Democrats in Congress similarly reject this discrimination.

And now the long-awaited survey of active military members reveals that a similar substantial majority of servicepeople don't see harms from ending discrimination.

From the Washington Post,
A Pentagon study group has concluded that the military can lift the ban on gays serving openly in uniform with only minimal and isolated incidents of risk to the current war efforts, according to two people familiar with a draft of the report, which is due to President Obama on Dec. 1.

More than 70 percent of respondents to a survey sent to active-duty and reserve troops over the summer said the effect of repealing the "don't ask, don't tell" policy would be positive, mixed or nonexistent, said two sources familiar with the document. The survey results led the report's authors to conclude that objections to openly gay colleagues would drop once troops were able to live and serve alongside them.
Just before the election, the Republican minority in the Senate blocked legislation that would have repealed the military's policy of discharging openly gay and lesbian service-members.

Don't look for this new evidence to change many Republican minds or to end Republican obstructionism.