Obama Calls for TARP-Fund Stimulus

WASHINGTON, DC-US President Barack Obama has called for several measures to stimulate growth, ranging from tax cuts, new infrastructure projects, and loans that support job creation. To pay for the package, whose costs have not been calculated, Obama is proposing to tap the repaid funds in TARP, according to comments he made in a speech Tuesday morning at the DC-based Brookings Institute.

Briefly, TARP, or the Troubled Asset Relief Program, was a $700-billion-plus package Congress and the Bush Administration hastily passed last September. It was meant to shore up faltering capital reserves at banks during a time when all signs pointed to a US and global financial system meltdown. A year later, the crisis has been averted, and all but a few banks–namely Citigroup and Wells Fargo–have repaid what they owe to TARP.

With these funds now available, Obama is revisiting several issues from his campaign and early administration days: He would like to see additional road, bridge, and other infrastructure construction–as well as a speed-up of those already approved under the stimulus package; as well as, an increased investment in clean energy.

Whether or not Obama will be able to tap these funds is unclear. Republicans are vehement in their objections, with some maintaining that it would be illegal to raid the fund for any purposes other than to pay down the federal debt.

Sen. Judd Gregg (R-NH), who was a lead author of the bill when it was pushed through Congress last year, has told reporters that using TARP for any other purpose would be a “violation of not only the literal law but the intent of what we were doing when we created TARP to begin with.”

Repurposing TARP would be a hard sell to both Congress and the American public–a fact that Obama himself acknowledged in his speech. Using taxpayer money to bail out banks that have been perceived as starting the recession was a bitter pill for many to swallow, already. “There has rarely been a less loved or more necessary emergency program than TARP, which–as galling as the assistance to banks may have been–indisputably helped prevent a collapse of the entire financial system,” Obama said.