Saturday, Dec 20, 2008
The Bush Administration’s plan to use TARP funding to aid the auto industry and Treasury Secretary Henry Paulson’s decision to seek the remaining $350 billion generated more confusion and concern about the already controversial emergency spending program.
Though the auto bailout package was widely expected, Paulson’s decision represented another policy reversal, having told CNBC just days ago “we’ve got what we need right now.”
“My conclusion is that they don’t have a long-term strategy, and they’re bouncing along from crisis to crisis,” said former FDIC Chairman William Isaac.
Critics in and out of government say the misguided decision to use TARP money for the auto bailout is an abuse of the program and will have negative consequences.
“Using TARP funds to bail out failing companies is incredibly risky and poor public policy, and was not the designated intention of the program when Congress approved it,” said Rep. Jeb Hensarling, a Texas Republican, who voted against the $700 billion TARP fund and is now one of four members of Congress’ oversight committee.
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Hensarling and others were quick to add that the auto bailout would lead to similar aid to other sectors.
“This is classic pork,” said Tom Schatz, president of Citizens Against Government Waste. “There’s going to be a long list, saying, ‘Now help us.’ They’re already lining up.”
Even critics of the TARP, which was rushed into law in the aftermath of the Lehman Brothers [LEHMQ 0.03 -0.002 (-6.25%) ] bankruptcy filing in mid-September, had been steadfast in saying if money has to be spent at all it should be used in efforts aimed at directly stabilizing the financial system.