David Kirkpatrick

January 27, 2010

TARP is a profit center

Who’d a thunk this last October when this thing was jammed through Congress.

From the link:

Guess what? The federal government will make money on bailing out the banks.

According to new numbers issued today by the non-partisan Congressional Budget Office, a key part of the much-loathed Troubled Asset Relief Program, or TARP, has become a profit center for the U.S. government.

The CBO projects the government will ultimately make a profit of $7 billion from assisting the banks: $3 billion from the Capital Purchase Program, in which the government propped up banks by purchasing preferred stock; $2 billion from helping Citigroup (CFortune 500); and another $2 billion from helping Bank of America (BACFortune 500).

In other words, the banks are on track not only to pay taxpayers back all the $200 billion plus we’ve lent them, but put a dent — albeit a small one — in our enormous budget deficits.

I blogged against the massive bank bailout and basically threw up my hands by the time ARRAS came around. I’m happy to report I was completely wrong at the time. TARP and subsequent stimulus may not have been the best possible solution (there’s no way to know, find out or even guess), but it’s not a failure and could even be provisionally considered a success. Reducing the budget by a penny would be a success for the program in my book.

October 6, 2009

Reversing the unemployment trend

Ideas from the White House.

From the link:

President Barack Obama is considering a mix of spending programs and tax cuts to respond to widening job losses that would amount to an additional economic stimulus without carrying that label.

The discussion of the initiatives, including a boost in transportation spending and an extension of an expiring tax credit for first-time homebuyers, comes as the White House is balancing rising concern about unemployment and a budget deficit the Congressional Budget Office estimates will total $1.6 trillion for 2009, and $1.4 trillion in 2010.

Administration officials have told allies in Congress that a broader transportation bill, and extensions of a homebuyer tax credit and unemployment benefits are all on the table, a Senate aide said.

August 26, 2009

Jobs aren’t recovering with economy

Filed under: Business — Tags: , , , , , — David Kirkpatrick @ 6:14 pm

Not exciting news, and the title’s probably a little bit misleading since it should read something closer to “don’t expect jobs to recover along with the economy once the economy really starts recovering.” Or something along those sobering lines.

From the link:

The mood regarding the U.S. economy may be inching, ever so slowly, toward optimism. But don’t expect to see much improvement on the jobs front anytime soon. The economy’s following a script for a jobless recovery, and unemployment is likely to stay high, if not get slightly worse.The Congressional Budget Office painted a worsening picture for joblessness on Tuesday: The CBO sees unemployment peaking at 10.4% next year from an average of 9.3% this year, before it falls to 9.1% in 2011.

So how can there be a recovery without job growth to go with it?

To start, companies were unusually quick on the trigger initiating massive layoffs during this downturn. But they’re unlikely to be equally zealous about hiring people back, especially since productivity is so high right now. The Labor Department reported that non-farm productivity grew at a 6.4% annual rate in the second quarter, the largest gain since the third quarter of 2003.

January 7, 2009

The US facing years of $1T deficits

I don’t like the idea, but there’s probably no other way about this mess. I suppose we’ll find out exactly how fiscally liberal Obama really is over the next year or two.

Thank god Bush 43 wasn’t handed this blank check.

From the link:

“At the current course and speed, a trillion-dollar deficit will be here before we even start the next budget,” Obama said Tuesday. “And potentially we’ve got trillion-dollar deficits for years to come, even with the economic recovery that we are working on at this point.”

On Wednesday, the Congressional Budget Office will release its 2009 budget and economic outlook, which will tell the deficit tale in black and white. A report from the Treasury Department last month found that the deficit in just the first two months of the current fiscal year exceeded $400 billion — almost as high as it had been for all of fiscal year 2008.

But Obama promises that his administration will also embrace budget reform and put a choke collar on the country’s record annual shortfall, if not in the immediate term, then soon after.

On Tuesday, he vowed to “bring a long-overdue sense of responsibility and accountability to Washington.”

For now, many economists, even some noted deficit hawks who warn about the danger of Uncle Sam’s long-term financial shape, say the severity of the economic downturn justifies borrowing more money in order to spend big in the short run and pave the way for long-term growth.

“Such steps — even if deficits exceed $1 trillion this year and next — are necessary to help avert a deep and prolonged recession,” according to a recent report by the Center on Budget and Policy Priorities.