CBO Releases New Estimates for TARP and Stimulus

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The Congressional Budget Office (CBO) now projects that the cost of the Troubled Asset Relief Program (TARP) will be significantly lower than previous estimates. Congress passed TARP in October 2008 to permit the Treasury Department to purchase or insure “troubled assets” that threatened market stability.

CBO estimates TARP will cost $25 billion; the agency’s estimates earlier this year put the figure at $66 billion and $109 billion. Factors in the lower estimate include additional repurchases of stock by recipients of TARP funds, lower estimates of assistance for AIG and the auto industry, lower participation in mortgage programs, and the fact that TARP funds can no longer be used for new purposes.

CBO has also updated its estimate of the American Recovery and Investment Act (ARRA), the stimulus bill passed last year. CBO estimates that the bill will cost $814 billion over 10 years, up from the original $787 billion. During the third quarter of 2010, the agency also estimated that the bill raised the GDP, lowered the unemployment rate, and increased the number of full-time jobs.

External links:
Report on the Troubled Asset Relief Program
Estimated Impact of ARRA on Employment and Economic Output

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