Monday, December 21, 2009

Carl Falotico: Don't spend the TARP money on job creation

  The Unites States got some unexpected good news the other day when it was announced that losses from the Troubled Asset Relief Program would be about $200 billion lower than was predicted this summer. This means that overall the program is expected to cost just $141 billion out of the $700 billion that was budgeted for it (not a bad price given it probably played a big role in preventing a global depression). As good as this is, politicians are already planning on how to spend this "extra" money. Specifically President Obama has been outlining a plan to use the TARP money for a job creation, and while I think that's a great goal, I'm against it.

  Why would an unemployed person be against a job creation bill? For two reasons, because there is no money to pay for it, and because that's what the original stimulus bill was supposed to do.

  The TARP was created to give loans to distressed banks so the entire financial system in the country wouldn't collapse. While it was generally understood that a lot of those loans wouldn't be paid back, the program wasn't just a big government handout. Because of that I think whatever money that is being repaid, even if it's unexpected, should be used to pay down the deficit. If you had $1,000 in credit card bills and the company cancels $500 of the charges, does that mean you should run out and spend another $500? No, because you're still in the red. Obviously the situation at hand is different, because spending the extra money could help spur more economic growth, which in the long run might be a better use of the money. And I'd be okay with using the money that way, if we didn't already have a stimulus plan.

  Remember the $787 billion stimulus that was passed in February? The point of that was to create jobs and keep people employed, so I'm against passing another stimulus before the first one has had time to have it's full effect. Because it takes time to find worthy projects to spend all that money on, estimates are that by September only 15 percent of it had been used. I couldn't find out how much was spent by December, but even if somehow it's up to 50 percent, that still leaves almost $400 billion dollars left over. If the administration has a plan to create jobs then the money which has already been budgeted for that task should be spent, not extra money which is from an unrelated program.

  Spending all the original money and still needing more, that's one thing, but taking an extra $150 billion while there is plenty of stimulus money left is unnecessary.

  I'm not trying to come off as overly critical of Obama and the Democrats, because I think they've taken a lot of steps to fix the economic problems the country is facing. While many people expected everything to magically get better when Obama took over, I've always thought about it in terms of a sick person going to the doctor. Sure the doctor can give someone medicine which will help them, but nothing makes someone better immediately, the body always needs time to heal naturally. The economy is the same way, regardless of how much spending and how many programs the government comes up with, the recession is still going to take some time to run its course. I support anything that needs to be done in order to speed that process up, but for the sake of minimizing the deficit, I hope they'll spend all their original money before going back for more.

  About the author: Carl Falotico is a 26 year old law school graduate who has recently moved back upstate from New York City. Check out Carl’s blog:

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1 comment:

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