Update on TARP costs

The Congressional Budget Office released its most recent estimate of monies allocated under Congress’s 2008 Troubled Asset Relief Program (TARP).  Recall that this is the program that was designed to allocate bailout monies to U.S. businesses intimately tied to the financial meltdown.  The latest estimate of cost to taxpayers is $109 billion.  Meanwhile, the Office of Management and Budget estimates that the total cost to taxpayers will be $127 billion.  So let’s average those two figures…the average estimated cost to taxpayers of TARP is $118 billion.  How much is that $118 billion per U.S. citizen?  $386.89.

I was opposed to TARP for several reasons.  One, I feel that capitalism only works when businesses, in equal proportion, get to experience the ecstasy and agony of business choices.  That is, bad business decisions that lead to failure have to lead to failure; there cannot be bailouts.  Second, I felt that unless there were changes to the institutions, the ideas and the people that made the bad decisions that TARP was simply an excuse to continue on with the status quo.  I still believe these two things about TARP.  I also said that the anticipated economic DEPRESSION was highly unlikely to occur because of greater information transparency and because of knowledge of Keynsian economics; and TARP is an example of both.

While I was a non-supporter of TARP when it was proposed a year and a half ago, I have to say that the recession was much more shallow than many people anticipated, in part because of TARP.  Do I consider $387 per citizen a fair price for a shallower recession?  Yes.

Jason