I have it on good authority from Hill sources that Treasury Secretary Tim Geithner will send Congress the letter tomorrow morning that will extend the Troubled Asset Relief Program through October 3, 2010. There’s no surprise here, except the precise timing and that some deficit hawks and bailout opponents had raised hopes that more deficit reduction was on the way. The timing is necessitated by the need for the House to find $10 b. to pay for the financial reform bill, H.R.4173. When the House Rules Committee finishes its work tomorrow, that bill will reduce the $700 b. TARP authority to $680 b., which at a 50% rate under the credit reform scoring rules will yield the requisite $10 b. When the House jobs bill is tacked onto the defense appropriation conference report next week, TARP will be reduced just enough to pay for that too.
As a former Hill economist, I can understand the temptation to pass important legislation without going through the normal appropriations process, which might kill it. We desperately need financial reform and more jobs. Whether we get what we’re being asked to pay for is the issue. Once you start using TARP as a slush fund, eventually you’re not going to like what you “paid for.”