Opinions Vary On What To Do With Extra TARP Money
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Federal money spent on the financial bailout is starting to come back, and that's prompted President Obama to consider whether to spend it again.
INSKEEP: The president speaks about jobs today. Unemployment stands at 10 percent, and the White House is considering several proposals. That includes a plan linked to $700 billion the U.S. committed last year to saving banks. Some banks are paying back the money, which leaves the question of what do with it now.
Here's NPR'S Jim Zarroli.
JIM ZARROLI: The job market may no longer be deteriorating the way it was. Just last Friday, the government said the unemployment rate fell a bit in November. But there is still an enormous pool of people looking for work, and businesses aren't hiring yet. Tom Kochan of MIT's Sloan School of Management says even when they do, the road to recovery will be very long.
Professor TOM KOCHAN (Management, MIT'S Sloan School of Management): We don't have the luxury of just letting the natural rate of job growth take its course because we have lost so many jobs and we have so much more to make up.
ZARROLI: Until now, the White House has appeared to be preoccupied by the war in Afghanistan and the effort to overhaul the health care system. The president's speech today at the Brookings Institution is part of an effort to show that the administration is focused on job creation, as well. One fortuitous development for the president is that the Troubled Asset Relief Program, or TARP, will probably lose much less money than first expected. Yesterday, he told reporters that the unused money could now be spent on other things.
President BARACK OBAMA: The question is: Are there selective approaches that are consistent with the original goals of TARP - for example, making sure that small businesses are still getting lending - that would be appropriate in accelerating job growth?
ZARROLI: The idea of using TARP money for job programs is strongly opposed by Republicans, like Senator John Thune of South Dakota. He spoke last week.
Senator JOHN THUNE (Republican, South Dakota): I think that's a bad idea. I think that any funds that are paid back into TARP ought to be used to be used to pay down the federal debt, which is a ticking time bomb and is going to create great peril for our economy in the long run if we don't take steps to address it.
ZARROLI: The president replied yesterday that he's willing to use part of the money for deficit reduction. But he also wants to spend part of it, and White House officials are betting that public anxiety about unemployment will trump deficit concerns. How might the TARP money be spent? MIT's Tom Kochan says the most efficient way of saving jobs would be to funnel money into state and local governments, so they don't have to lay off as many people. And though he says there are problems with the idea, he also favors tax credits to encourage employers to hire more.
Prof. KOCHAN: We've seen business begin to pick up, but we have seen companies reluctant to add new workers. And so I think this would really provide the marginal push that a number of employers need.
ZARROLI: Kochan says with the economy in dire shape, this is not the time to focus on deficit reduction. Carnegie Mellon University's Alan Meltzer - who served on the Council of Economic Advisors under President Reagan - agrees. But Meltzer says instead of putting the money into short-term jobs programs, Congress should cut business taxes. That would enable U.S. companies to spend more on capital improvements and become more productive.
Professor ALAN MELTZER (Carnegie Mellon University): We need to expand exports, and that means we need to improve our ability to manufacture in a competitive position. And the way to do that is to get more capital in the industry.
ZARROLI: Meltzer says that solving the economy's long-term problems is the best way to strengthen the job market over time. But neither the administration nor Congress can afford to wait that long. With an election year approaching, the president has just a narrow window of time to come up with ways to get the job market out of the deep funk it's in.
Jim Zarroli, NPR News, New York.
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