Economic Recovery Measures

CBO Reduces Projected Cost of TARP

Back in December, we had surmised that due to recent developments with Citigroup, GM, and AIG, CBO's cost estimate of TARP would come down further from the $25 billion it estimated in November.

"Meet the Generations": Generation X

Meet Kate, a fictitious 41 year old Generation X member. How will our leaders’ fiscal choices affect her life? In our fifth and final installment of our “Meet the Generations” series, we look at Kate’s fiscal future, based on the two alternative futures scenarios from our recent paper “America’s Fiscal Choices at a Crossroad: the Human Side of the Fiscal Crisis”.

‘Line’ Items: Brackets and Budgets Edition

Brackets – As many busy themselves today going over the brackets for the big tourney, picking the next Cinderella and who will win it all, the real challenge for prognosticators remains predicting how the budget impasse will pan out. The budget process has gotten uglier than the 68 team bracket and all the moving parts – FY 2011 spending, the FY 2012 budget and the debt limit – make the road to Houston look like an easy jaunt.

Happy Second Birthday ARRA!

While the budget world is caught up in the President's budget, it's time to celebrate an important birthday. On this day two years ago, President Obama signed into law the American Recovery and Reinvestment Act (ARRA), which provided $821 billion in spending and tax cuts over ten years, although most of these funds were targeted for the first three years. (Previous estimates from CBO have put the cost initially at $787 billion, then $862, then $814.)

Good News, Taxpayers!

Last month, we reported the positive developments that were happening with the major players--GM, Citigroup, and AIG--still left in the Troubled Asset Relief Program (TARP). In November, Citigroup had fully repaid all the assistance it had received in various TARP programs, GM had significantly reduced Treasury's ownership stake in itself, and AIG was in the process of an exit plan.

Fed Pays Record $78.4B to Treasury from Interest on Risky Assets

Yesterday the Federal Reserve announced it would be paying a record $78.4 billion to the U.S. Treasury for 2010. It accumulated this large sum from interest on its holdings of risky assets, like mortgage-backed securities, that it acquired during the financial crisis. The Fed's policy dictates that it turn over this money to the Treasury at the end of each year.

Moody's Warns U.S. over Tax Cut Deal

With the Senate getting past a procedural vote in approving the tax deal, it appears more and more likely that this deal will soon become law.

So, How About That TARP?

Last week, we reported the good news from the Congressional Budget Office that the Troubled Asset Relief Program (TARP) would cost $25 billion, significantly less than any previous estimates. Now, the Treasury has announced the sale of its remaining Citigroup stock for $10.5 billion, another bit of good news for taxpayers.

Markets’ Initial Reactions to the New Fiscal Compromise

Financial markets have reacted to the new tax cut deal between the White House and Congressional leaders which would add some $800-900 billion to our national debt.

In the past two trading days since the deal was announced, we have seen the largest bond sell-off this year and so interest rates have gone up fairly dramatically. So far, yields on the benchmark 10 year Treasury bond have jumped by over 35 basis points (considered a sizeable rise), to the highest point since June. Money has shifted to the stock market, and the dollar is higher.

Tax Cut Deal Revealed

It appears that President Obama and Republican lawmakers have reached a deal to extend the tax cuts enacted from 2001 to 2003.

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