How to Spend $200 Billion Leftover TARP Funds

The bailout is estimated to cost "only" $141 billion. Should we pay down the debt, or boost job creation?

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The elephantine bailout was estimated to cost $341 billion this August, but now that number has dropped by $200 billion. The good news came as Wall Street continued to pay back the bailout funds at an unexpectedly fast pace. Where will the extra money go? Columnists say there are competing interests. Fiscal conservatives will look to use the money to help pay down the federal deficit, but with unemployment over 10 percent, President Obama is under pressure to use the funds to create job growth. What to do with TARP's $200 billion surplus:

  • Give to Local Government  Douglas McIntyre of 24/7 Wall Street blog says the stimulus hasn't "funneled enough money into state and municipal treasuries to keep the number of people who have local government jobs from shrinking."
  • Pay Down the Deficit  Stan Collender of the Capital Gains and Games blog is hopeful the money will be used to pay down the federal deficit. "My numbers are admittedly much more optimistic than the official estimates, but a $200 billion reduction in the 2010 deficit could lower it to around $1 trillion, and possibly less. A $1 trillion 2010 deficit would be $400 billion less than the $1.4 billion recorded in 2009."
  • A Jobs Program  The Wall Street Journal's Deborah Solomon says "the lower-than-expected TARP losses could help the White House tap remaining funds for a jobs program because the revised estimates will help bring down the projected federal budget deficit since the White House will be able to assume less spending associated with the program."
  • Money Will Get the Government Off Wall Street's Back  Boyd Erman of Canada's Globe and Mail thinks the extra funds will hurt calls for more regulation and reform on Wall Street. "The bad news is it's harder for the administration to push its hard line on long-term changes in the culture of banker pay when the industry is rapidly becoming less beholden to the government."
This article is from the archive of our partner The Wire.