With the bank bailout costing less than expected, pressure is building on the President to use some of the $700 billion to help small businesses and boost job growth
By Kate Andersen Brower and Nicholas Johnston
(Bloomberg)—President Barack Obama said he is considering "selective" use of money from the Troubled Asset Relief Program to boost U.S. job growth and that some of the fund can be devoted to deficit reduction.
Obama is set to give an address tomorrow on measures to help create jobs, and momentum is building among Democrats in Congress to tap the $700 billion TARP program, which was created last year to shore up financially troubled banks. The Treasury Department expects the program to cost about $200 billion less than predicted.
"Some of that money can be devoted to deficit reduction," Obama said in response to a question from reporters at the White House. "The question is are there selective approaches that are consistent with the original goals of TARP, for example making sure that small businesses are still getting lending, that would be appropriate in accelerating job growth."
The proposals the administration is examining to spur job growth may include incentives to make buildings more energy efficient, more spending on infrastructure projects, incentives to encourage small business hiring and direct aid to state and local governments to prevent layoffs. The administration is constrained by a budget deficit that hit $1.4 trillion in fiscal 2009 and is forecast to be about the same in the current fiscal year.
The U.S. unemployment rate declined to 10 percent in November from 10.2 percent the month before, the Labor Department reported. The U.S. has shed about 7.2 million jobs since the recession began in December 2007.
"We have had a very tough year and we've lost millions of jobs," Obama said after meeting at the White House with Prime Minister Recep Tayyip Erdogan of Turkey. "At least now we are moving in the right direction."
Obama said the financial bailout "has turned out to be much cheaper than we had expected, although not cheap."
House Speaker Nancy Pelosi said last week that some TARP funds can be used to create jobs and help small businesses. That idea is opposed by some Republicans.
"TARP was never intended to be used as a revolving slush fund to pay for the majority's political, economic or social agenda," Representative Jeb Hensarling, a Texas Republican, wrote in a letter to Pelosi.
White House press secretary Robert Gibbs said "no final determinations have been made" regarding using the TARP funds. He repeated that the administration won't seek another stimulus like the $787 billion package of tax cuts and spending passed by Congress earlier this year.
To contact the reporters on this story: Kate Andersen Brower in Washington at firstname.lastname@example.org; Nicholas Johnston in Washington at email@example.com