Give TARP a Break

By Robert Samuelson
RealClearPolitics

WASHINGTON -- It isn't often that the government launches a major program that achieves its main goals at a tiny fraction of its estimated costs. That's the story of TARP -- the Troubled Assets Relief Program. Created in October 2008 at the height of the financial crisis, it helped stabilize the economy, used only $410 billion of its authorized $700 billion and will be repaid most of that. The Congressional Budget Office, which once projected TARP's ultimate cost at $356 billion, now says $19 billion. This could go lower.

You would hardly know.

Almost everyone loves to hate TARP. It's a favorite political sport of liberals, conservatives, Republicans, Democrats -- and the public. A Bloomberg poll last October asked how TARP had affected the economy. The results: 43 percent said it weakened the economy; 21 percent said it made no difference; only 24 percent said it helped, with 12 percent unsure one way or another. Commentators in newspapers from The Wall Street Journal to The New York Times disparage TARP.

Wrong.

One lesson of the financial crisis is this: When the entire financial system succumbs to panic, only the government is powerful enough to prevent a complete collapse. Panics signify the triumph of fear. TARP was part of the process by which fear was overcome. It wasn't the only part, but it was an essential part. Without TARP, we'd be worse off today. No one can say whether unemployment would be 11 percent or 14 percent; it certainly wouldn't be 8.9 percent.

(More here. LP note: Samuelson is generally considered to be a conservative economist.))

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