So it's a bit of a reminder just
how different things are now--and how unexpected TARP's political
consequences were at the time--to hear President Bush say, basically,
that TARP wasn't really of a tough call. From Politico's Andy Barr:
made the decision to use your money to prevent the collapse from
happening," Bush said during a speech in Tyler, Texas, according to
reports from The Associated Press and other outlets...
The former president said the choice to backstop many of the country's leading financial institutions "wasn't that hard for me."
plenty had reservations about the bailout when it happened, Bush's
recollection is a pretty stark reminder that political consensus had
indeed coalesced around the notion of taking drastic measures to stop
the U.S. financial system from fully collapsing.
people expected us to act, to respond to the best extent we could, to
stop the downward flow in the markets and to restore the flow of credit
in the economy," House Majority Leader Steny Hoyer said on the day
Congress passed the bailout.
It's difficult to find a working
politician--especially a Republican--speak of the bailout in such terms
these days. In some places, TARP is as toxic as the securities the
government bought up.
Meanwhile, President Obama has been
repeatedly blamed for it by the broader public, which has transposed
TARP's genesis onto his presidency: Only 34 percent of respondents told Pew
in July that the bailout passed under Bush, while 47 percent said it
passed under Obama. (Obama did support it, and his Treasury Deptartment
did implement its latter stages.)
So the president and his party seem to be saddled with the political baggage of the bank bailout, whether they like it or not.
And that baggage appears to be significant. According to Pew, votes in favor of TARP will make candidates less likely to receive support in the coming midterms.
At the same time, TARP seems to have more or less worked.
U.S. financial system has stabilized. The cost of the program will be
far less than its advertised pricetag, according to the Treasury, which
now estimates a total cost of $50 billion. While Congress authorized
$700 billion, only $388 billion had actually been spent as of the first
week of October, and $204 billion had been repaid. Bloomberg reported today
that U.S. taxpayers have actually been making money off of TARP
repayments--$25.2 billion, in fact--but Treasury doesn't expect the full
program to turn a profit.
It's unclear how readily these
findings and projections will sink in with the voting public, given that
TARP's cost has been reported as $700 billion--the size of the total
authorization--for two straight years.
It's already too late for
moderate Republicans who have lost in primaries, but it seems like a
wise move for Democrats, fighting an image of reckless spending and
federal irresponsibility, to get the word out as soon as they can.