TARP: Not Obama's, Not a Failure, Not Losing Money

As a campaign meme, I like the Democratic formulation: TARP means Taxpayer Assistance for Rich People.

But the repug/teabagger mythologizing on TARP is too deep and widespread to be countered with a new acronym.

Kevin Drum explains:

To this day, tea partiers remain convinced that it was both unnecessary and a vast black hole for taxpayer money. Neither is true, but the tea party view is now so pervasive that, as Ben Smith reports, politicians of both parties consider TARP the new third rail of American politics:

The Troubled Asset Relief Program is widely viewed as the original sin of the Obama administration — though it was put together under President George W. Bush and succeeded far beyond expectations. It’s widely seen as the tipping point for disgust with elites and insiders of all kinds — though it could also be seen as those insiders’ finest moment, a successful attempt to at least partially fix their own mistakes.

SNIP

....A study this summer by former Fed Vice Chairman Alan Blinder and Moody’s chief economist Mark Zandi [...] projected that without federal action — TARP and the stimulus — America’s gross domestic product would have fallen more than 7 percent in 2009 and almost 4 percent in 2010, compared with the actual combined decline of about 4 percent.

And the cost of TARP? CBO estimates the government will make a profit of $7 billion from the bank bailouts (though it may still lose money on GM and Chrysler, which were also rescued with TARP funds) and it now looks like AIG will pay back all its bailout money too. Bottom line: the ongoing recession caused by Wall Street's reckless behavior has cost us a bundle. But TARP itself? Its net direct cost is zero, and when you include the fact that it almost certainly saved the banking system and softened the recession, it may boast the biggest bang for the buck of any bill ever passed by Congress.

SNIP

But it also represents the modern rebirth of know-nothingism represented by the Tea Party movement. I don't have a problem with the tea partiers' anger — hell, I share it — but instead of channeling it into a demand for genuinely game-changing reform of Wall Street, conservative demagogues and business interests managed to channel it into mindless rage at one of the very things that saved us from Wall Street's folly. The tea parties will eventually pass into the dustbin of history, I suppose, but in the meantime TARP's fortunes certainly haven't made me more confident that our government can do the things it has to do. Instead, TARP turned out to represent the outer limit of what our government can do, and that was just the bare minimum to avoid catastrophe. We deserve better than that.

Read the whole thing.