Do you have any confidence that Washington even knows how to properly address our massive and growing fiscal deficit? Rahm Emanuel, Tim Geithner and others understand that from a political standpoint they need to start talking about deficit control, but will that talk lead to action?
Do you think Congressional leaders, specifically Harry Reid and Nancy Pelosi, have the character and fortitude to ‘tighten the belt?’
The first real test for this crowd is already upon us. How so? The TARP, with a $700 billion commitment, expires on December 31, 2009. Of that $700 billion, $400 billion has actually been spent. Why wasn’t the other $300 billion spent? Well, don’t forget that Obama’s Stimulus Bill totaled $770 billion and assorted other programs implemented by Treasury have run into the trillions. As a result, Geithner did not immediately need to allocate those funds.
The question begs as to what will happen to that $300 billion. While Emanuel and Geithner are starting to ‘talk’ the fiscal discipline ‘talk,’ will they ‘walk the walk?’
Walking the walk would compel Geithner to allow the TARP legislation to expire without tapping those funds. Will he do it? The problem Geithner faces is the fact that various organizations already being propped up by Uncle Sam continue to be burdened with future losses. Which organizations? Freddie, Fannie, GMAC, and don’t forget the likelihood that the FHA and FDIC come calling very soon. Additionally, don’t discount that Geithner might look to utilize the TARP funds to support some insurance companies faced with the prospects of growing losses on commercial real estate.
The Wall Street Journal addresses this topic this morning in writing, TARP’s Moment of Truth:
Democrats are now claiming they really truly are worried about the nation’s exploding deficits. Lucky for them, South Dakota Senator John Thune is giving them the perfect chance to prove it.
The Republican yesterday introduced a bill that would bar Treasury Secretary Timothy Geithner from extending the $700 billion Troubled Asset Relief Program beyond its expiration date on December 31. The legislation would not affect the roughly $400 billion worth of handouts that remain with the likes of Citigroup or General Motors. It would, however, halt further lending and immediately return the fund’s $300 billion in unobligated money to taxpayers.
The White House keeps claiming it wants to do just that, but Mr. Geithner also refuses to rule out signing a TARP renewal. What the Administration won’t say is that it likes retaining a slush fund that can be doled out carte-blanche to politically worthy recipients. Only this week AFL-CIO President Richard Trumka dreamed up a new use for TARP money, demanding it be recycled into favored community banks or small businesses. This is how an emergency bailout program morphs into a White House’s “walking around” money.
So just what kind of walk will Treasury Secretary Geithner take? Will he ‘walk the fiscal discipline walk’ or will that merely be the talk? Will he pander to American taxpayers while continuing to allocate his ‘walking around’ money into sinkholes?
What do you think?