By PHIL MATTINGLY
As Published in CQ TODAY October 19, 2009
Democrats and Republicans have opened a new — and many say predictable — front in their ongoing war over federal spending: the money flowing back to the government from the Troubled Asset Relief Program.
In exchange for getting money from the $700 billion bailout known as TARP, banks were required to pay dividends to the government. Those returns — as well as money that has been paid back, with interest, as banks return to good health — have become an irresistible temptation to some lawmakers, who want to spend it on such things as housing aid, roads and health care.
Recipients have paid back $70.7 billion and paid out $9.5 billion in dividends, interest and fees, according to the Treasury Department. Also, a little more than $63 billion in original program funding remains uncommitted.
Foreclosure prevention, a highway bill and employee health care coverage at specific corporations have all been mentioned as possible uses for the money. That conveniently ignores a provision in the law that created TARP (PL 110-343) requiring that any returns from the program “be paid into the general fund of the Treasury for reduction of the public debt.”
House and Senate Republicans have railed against the idea of using the money to fund other programs, complaining that TARP risks becoming a revolving “congressional slush fund.”
Sens. John Thune, R-S.D., Jim DeMint, R-S.C., and David Vitter, R-La., have made a common practice of introducing amendments to require that TARP funds be used to pay down the national debt, holding up several major bills in the process.
Thune also led a group of 40 senators — 39 Republicans and Democrat Mark Begich of Alaska — in sending a letter to Treasury Secretary Timothy F. Geithner requesting that he allow the program to expire as scheduled at the end of the year. Rep. Jeb Hensarling, R-Texas, joined Thune in introducing legislation that would force the expiration.
Geithner has been noncommittal on the future of the program, which can be extended, at his discretion, until October 2010.
But with House Financial Services Chairman Barney Frank, D-Mass., convinced that Geithner will extend the program — and sponsoring a bill (HR 3068) that would use $6.5 billion in TARP dividends and uncommitted funds to aid housing initiatives — the debate is likely to rage on.
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