South Dakota Republican Sen. John Thune doesn't like taxes.
He doesn't like deficit spending, either. He's attempting to put an end to the Troubled Asset Relief Program (TARP).
Sen. Thune reiterated his support for terminating the TARP Dec. 8. He would like to prevent the Treasury Department from spending additional funds that would add to the ballooning national debt.
"Although only a fraction of the money from the nearly $800 billion stimulus bill passed earlier this year has been spent, Democrats in Congress are already looking for ways to spend more," Thune said in a press release this week. "TARP, which has strayed far from what Congress intended, has been a de facto slush fund for months now …"
It's certainly difficult to fault the senator for taking such a position. He reflects an attitude that is deeply ingrained in most South Dakotans. Cut before you spend. Get by with what you already have. Live simply. Don't be extravagant.
Had Wall Street and other financial industries followed such a philosophy, our economy may not have tanked so severely in late 2008. Of course, other factors were at work back then, too, that only added to our financial woes.
Sen. Thune can argue, with some validity, that TARP isn't working. But it's important to consider one value aspect of the program that's not highly tangible; that doesn't necessarily show up in ledger books.
Elizabeth Warren – head of the Congressional Oversight Panel and fierce critic of Wall Street and the bailouts – delivered a surprise this week: In her opinion, TARP worked (for the most part).
The Congressional Oversight Panel's December oversight report, "Taking Stock: What Has the Troubled Asset Relief Program Achieved?" concludes that TARP was an important part of a broader government strategy that stabilized the U.S. financial system. It is apparent after 14 months, however, that significant underlying weaknesses in the financial system remain.
The Troubled Asset Relief Program (TARP) was the centerpiece of the federal government's multi-pronged response to the financial crisis. While it is impossible to disentangle TARP from other rescue efforts, it is clear the program played a critical role in renewing the flow of credit and preventing a more acute crisis.
The panel found that this overwhelming fiscal response, however, created an implicit guarantee for major financial institutions that distorts pricing for capital and encourages excessive risk-taking. Unwinding this guarantee poses a difficult long-term challenge.
Before TARP, Wall Street, and subsequently, our economy, was practically at a tipping point. TARP helped restore financial confidence.
In the Emergency Economic Stabilization Act (EESA), the law establishing TARP, Congress established broad goals that went beyond the short-term objective of easing the panic. The panel's review found that many ongoing problems indentified by Congress remain in the financial markets and broader economy.
Perhaps Sen. Thune has access to financial experts and other resources that back up his desire to see TARP eliminated. However, when Warren, who has been critical of the bailouts, like Thune, notes that TARP seems to be helping, it gives us pause.
We'd love to see our economy rebound quickly. We'd love to see the financial doldrums that have been persistent nationwide for so long finally go away.
We aren't sure that eliminating TARP will have that outcome. Perhaps Sen. Thune should devote his efforts to solving many of the economic problems that still plague our country, rather than eliminating a program that, if nothing else, is maintaining a sense of confidence that is so important right now.