TARP for Fun, But Not Profit

During the economic policy speech he just wrapped up, President Obama said that the Troubled Assets Relief Program (TARP) "is going to reap billions in profits."

Hooey.

Give the administration credit: They're right that TARP will cost less than anticipated, by about $200 billion. This is mostly because a bunch of banks are paying back the money (sometimes money they never wanted in the first place) with interest and ahead of schedule.

But then take the credit away again. Obama intends to spend the money "saved" from the TARP allocation on a jobs program, which will include bridge building and an always-popular provision to help people weatherize their homes.

This assesment from CNN keeps things in perspective:

The American public is still expected to incur a massive loss in the end—the question is just how much it will be. A separate estimate issued earlier this year by the Congressional Budget Office warned that TARP will ultimately cost taxpayers approximately $159 billion.

To review: TARP will cost $159 billion outright, and we're going to spend another $200 billion on a jobs program. Profit!

I wrote about TARP and The New York Times' confusion about the definition of "profit" here in September.