Committee for a Responsible Federal Budget

A Reversal for TARP

Dec 16, 2011

As the federal government has been slowly winding down much of its commitment in the Troubled Asset Relief Program (TARP), the prevailing trend for cost estimates of TARP was one of decline (see, for example, here and here). However, that has changed with the release today of CBO's newest estimate.

The most recent estimate of TARP has the program costing the government $34 billion, a significant jump from the $19 billion estimate that CBO made in March. As you can see in the table below, the auto companies (specifically GM and GMAC) and AIG are the reasons for the increase. CBO cites lower market value for the investments the government has made in these companies (especially the hundreds of millions of shares of common stock) as the reason for the projected subsidy cost increase.

Still, the table shows that the subsidy cost of TARP is relatively low compared to the total amount spent.

Subsidy Cost Estimate (billions)
AreaMarch 2011December 2011Amount Disbursed
Capital Purchase Program-16-17205
Citigroup and Bank of America-7-840
Community Development Capital Initiative001
Assistance to AIG142568
Subtotal, Financial Institutions-91313
    
Auto Company Assistance142080
Investment Partnerships1018
Mortgage Programs13133
    
Total1934414

While the cost estimate may not look as good, CBO has found a way to make TARP look good in another infographic. This infographic breaks down TARP by category (like in the table above), detailing what each part entails and how much has been disbursed, repaid, or is still outstanding. Certainly, it is a good graphic for familiarizing yourself with the basics of the program.

The changing cost estimate is now incorporated into our tracking of TARP on Stimulus.org.