Obama Considering Applying TARP Funds To Reduce Budget Deficit?
By Janet Peterson on February 19, 2010, 3:28 pm Posted in Economy NewsIt is no secret that our economy is not in the best shape. With an enormous budget deficit and unemployment rates rising, many would agree something needs to be done. What kinds of options are available? What can be done to fix our economy? President Obama has proposed a plan he thinks may help.
Troubled Asset Relief Program
The Troubled Asset Relief Program, also known as TARP, is a government program to strengthen financial institutions. This is done by purchasing equity and assets from institutions to help them recoup from losses and become financially stable again. Some of the banks have already paid the government back, while others promise they intend to pay back the bailout money soon. While the program has helped turn around some struggling businesses, there are still many that do not support the bailout and it remains fairly unpopular.
Recently, President Obama has suggested using $30 billion in funds from TARP to help small businesses in a way that would promote more jobs. Some of the proposals include giving small businesses tax credits to hire new workers and increasing lending to some of the smaller businesses. Obama has shared that providing jobs for more people is a top priority. With the U.S. unemployment rate at 10%, he feels this is an important task to tackle. Some analysts even believe that by June the unemployment rate could reach 11%, which would give the country it’s highest rate since World War II.
Mixed Reactions
As with any proposed governmental measure, the idea of using TARP funds to create jobs in hopes of reducing the budget deficit has been met with mixed reviews. Many Democrats feel the need to help provide jobs is necessary for our current economy. Some Republicans on the other hand, feel that using TARP funds to create jobs would violate the original intent of the bill. Their argument is that the funds were supposed to be used to help institutions get back on their feet, and since some of the funds have already been paid back, they should be used to reduce the budget deficit, not be reallocated for a new project. Other lawmakers have stated they would simply like to see the bailouts end. Overall, the TARP program remains unpopular but it is likely it will continue for another year. Lawmakers will have to decide how the rest of the funds will be used.
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