White House Eyes TARP Cash to Slash Deficit

Administration debating options for leftover $200B
By Rob Quinn,  Newser Staff
Posted Nov 12, 2009 6:17 AM CST
Rep. Paul Ryan, R-Wis., ranking Republican on the House Budget Committee, left, and Sen. Judd Gregg, R-NH, ranking Republican on the Senate Budget Committee, discuss the federal deficit.   (AP Photo/Susan Walsh)

(Newser) – The White House is debating using some of what remains in the $700 billion bailout fund to help cut the nation's deficit. Around $210 billion remains unspent and financial institutions are expected to repay another $50 billion over the next 18 months. The administration wants to keep some of that cash for emergencies, but the bulk will be dedicated to deficit reduction, sources tell the Wall Street Journal.

Analysts say that while TARP funds won't make that big a dent in the projected $1.4 trillion deficit for the government's next fiscal year, the move will calm fears that the leftover cash will turn into a "slush fund" for Congress. The proposal will also allow the administration to reduce the deficit without cutting spending or hiking taxes, both of which could slow down the economic recovery.