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That's the takeaway from the CBO's new report on the Troubled Asset Relief Fund. You might wonder how a $700 billion program can return multiple cost estimates. The answer, basically, is that the TARP program's costs are not simply how much the government spends. They are how much the government spends minus how much they make when they sell the troubled assets. And CBO's new estimates suggest the troubled assets will be worth less than we thought:
In other words, the price tag on the program just jumped by $167 billion.CBO currently estimates that the net cost of using the TARP’s full $700 billion in purchase authority will total $356 billion—$336 billion to be recorded in 2009 and $20 billion to be recorded in 2010. That estimate amounts to a roughly 50 percent net subsidy—that is, roughly one-half of the gross purchase authority. CBO’s most recent estimate of the TARP’s cost is higher than what we presented in January: by $152 billion for this year and $15 billion for next year (at that time, our estimated net subsidy was approximately 27 percent of the $700 billion purchase authority). The revisions stem from three factors: changes in financial market conditions, new transactions, and a small shift in the anticipated timing of disbursements.
