Stan Collender takes issue with me over TARP. Aieee!
First, as the WSJ story says, the White House is talking about the current fiscal year — 2010 — and it has already made an estimate of the spending that will occur and the revenues that will be collected. What the administration is saying now is that some of the spending it projected might not be needed and, if so, that it is planning not to find some other use for the funds. As a result, the projected deficit and the amount the government was expected to borrow could be lower, in this case at least $100 billion or so lower, than was originally assumed. … You definitely can reduce the projected deficit and the debt by not spending funds that were projected to be spent. That, in fact, is how you do it. Spending that has occurred has already increased the deficit and the only way to reduce it in the future is not tto continue to spend the dollars again.
On these issues, my default mode is to defer to Stan. (I am waiting a reply from my source.) But then he adds this interesting nugget:
A question should be asked about whether the Obama administration deliberately overestimated how much TARP would cost in 2010 so that it would be able to claim savings later in the year. This has been a favorite tactic of Office and Management and Budget directors in the past. Indeed, everyone from David Stockman to Dick Darman to Leon Panetta liked, and it was clearly something that the G.W. Bush administration used with impugnity. But regardless of whether it was intentional or fortuitous, not spending TARP money that had been projected to be spent will in fact lower the deficit and the amount of government borrowing compared to what otherwise would have been spent.