Last Thursday President Obama claimed before a large audience that the government had recovered “every dime” of the financial bailout. But according to a CBO report issued this month, Obama is off by at least $24 billion and as much as $63 billion dollars, depending on which government figures are used.
Speaking in Miami Obama told the crowd “We got back every dime we used to rescue the financial system, but wealso passed a historic law to end taxpayer-funded Wall Street bailoutsfor good.” This is a reference to TARP, the Troubled Asset Relief Program, which was used to bail out banks and the auto manufacturers.
The same day Obama made this claim the Congressional Budget Office issued a new report which shows that taxpayers have not, in fact, received back all of the money they put in to rescue failing institutions. The program as a whole has disbursed $417 billion dollars. Of that amount, CBO estimates the subsidy cost of the program (losses offset with gains in some areas) will be $24 billion dollars.
The same CBO report notes that the Office of Management and Budget has a much higher estimate for the subsidy cost off the program, $63 billion. The difference in the two estimates has to do with the anticipated number of people who will take advantage of TARP funded mortgage assistance.
There is one possible caveat to Obama’s claim. Obama’s comments could be read not as a reference to TARP as a whole but as to one section of the program, i.e. TARP money invested in “the financial system.” If the money put into AIG and banks, i.e. Bank of America, Citigroup, etc. is considered separately from money given to automakers, mortgage programs and so-called “investment partnerships” then the government is indeed in the black. Excluding these other TARP investments from the picture, TARP has actually earned $11 billion on its investment (though again these gains are more than offset by losses elsewhere in TARP).
Obama is either making a narrow and misleading statement about TARP’s cost by cherry picking one segment of it, or he is making a completely false claim about the whole program. Either way his audience is not getting a real picture of the government’s return on investment.