The Obama administration says the cost of the taxpayer-financed bank bailout will be about $200 billion less than projected and is looking to use some of the money to fund new job-creation efforts.
President Obama on Tuesday will lay out policy proposals intended to bring down the nation’s 10 percent unemployment rate before the November congressional elections. While Mr. Obama didn’t say directly whether he would seek to redirect some of the repaid bailout money to jobs programs, he has stressed that job creation is a top priority.
“Having gotten the financial crisis under control, having finally moved into a positive territory when it comes to economic growth, our biggest challenge now is making sure that job growth matches up with economic growth,” Mr. Obama told reporters Monday.
A White House spokesman said the plan may include spending at least some of the $200 billion in bailout savings to help create new jobs.
“That’s something that this White House is looking at,” said White House press secretary Robert Gibbs.
But Republicans have accused Mr. Obama of trying to skirt the spirit of the law, saying all unspent Troubled Asset Relief Program (TARP) money should go toward deficit reduction. Some also are suggesting that a change in the law would be required to legally spend the money as proposed by the White House.
Sen. Judd Gregg of New Hampshire, the top Republican on the Senate Budget Committee, said it would be a “fundamental hard to our creditability” to use the money for something other than for “financial(ly) distressed activities” or paying down the debt. Using it for other purposes would make it a “slush fund.”
“You might as well say you’re going to add it to the debt,” Mr. Gregg told reporters Monday. “That’s a sham to use it to justify additional spending.”
The $700 billion TARP, proposed by the administration of President George W. Bush and passed by Congress last fall, was intended to avert a catastrophic meltdown of the economy by offering financial institutions taxpayer funded loans.
But with Wall Street paying back the loans at a faster rate than expected on the heels of a gradually improving economy, the White House says it expects the program to lose about $141 billion - down from an August estimate of $341 billion.
“TARP has turned out to be much cheaper than we had expected - although not cheap,” Mr. Obama said.
The president said the key question is determining whether the bailout money could be put toward selective job creation that meets the original intent of the law. He cited as an example directing bailout money to make it easier for small businesses to get loans.
“Although we’ve stabilized the financial system, one of the problems that we’re still seeing … (is) that small businesses and some medium-sized businesses are still feeling a huge credit crunch,” Mr. Obama said.
He also said some of the money could be devoted to reducing the federal deficit.
The president’s comments came as congressional Democrats have proposed spending as much as $70 billion in unused TARP funds for construction and repair of roads and bridges, and to save the jobs of firefighters, teachers and other public employees.
The administration says it will listen to other ideas on how best to create and save jobs.
“We don’t think there is one silver bullet, one plan, one speech or a singular piece of legislation that alone will solve double-digit unemployment,” said White House spokesman Dan Pfeiffer.
c Kara Rowland and Jennifer Haberkorn contributed to this report.