>In the selling of financial reform, which passed the Senate yesterday, there was no more powerful rallying cry than "No More Bailouts." Commentators targeted TARP, the $700 billion government fund that capitalized companies at the height of the economic crisis -- and is now expiring. (To satisfy Scott Brown, who opposed a tax on the biggest banks, Democratic congressional leaders helped pay for reform by shutting down TARP three months ahead of schedule.)
TARP has been both a policy success and a political disaster. Economists across the political spectrum agree that without Washington's shot in the arm, millions more jobs and thousands more businesses could have been lost -- most of them far from Wall Street. TARP's "bailouts" of the banking sector were actually high-interest loans that have turned a profit for taxpayers. The net costs (about $105 billion) came from mortgage aid and the auto industry and AIG -- not from banks. And, of course, $105 billion is far less than the cost of another Great Depression. TARP is the rare government program that ended early and under-budget, and having met a worthy goal: the beginning of an economic turnaround.
So why the big gap between perception and reality? And how can incumbents defend their pro-TARP votes? Among pollsters in both parties, there is remarkable consensus on the subject.