It might be a good idea to devote more money to job creation (okay, it is a good idea), but there is no difference between using left over or repaid TARP money for this purpose than any other money. CBO recently revised downward its projection of the money that would be lost on the TARP since it now expects the bulk of loans to be repaid. This reduces its projection of the deficit. Under the law, TARP money is returned to the Treasury, however, if we had a specific deficit target in mind, the better than expected numbers on the TARP now means that the government is projected to come in under that target. However, CBO also increased its projections of the deficit back in August because the economy had performed considerably worse than it had anticipated when it made its budget projections last winter. If we work from the winter deficit projections, we are still looking at higher than predicted deficits, even with the savings on the TARP. So, the real question is how large a deficit the country is prepared to live with. The TARP really has nothing to do with this question.
--Dean Baker
