Recent Op-Eds

A year ago our country was in the midst of a serious crisis. There was a very real danger credit markets would freeze and the economy would grind to a halt, affecting families and businesses across South Dakota and the country. Faced with this threat, Congress passed the Troubled Asset Relief Program (TARP), which was designed and proposed as a measure to help failing banks get toxic assets off their books while they regained their financial footing. Unfortunately, TARP was subsequently used by the Treasury Department to acquire extensive ownership interests in private businesses. While $700 billion was provided by Congress over a year ago for TARP, roughly $300 remains unspent.

Earlier this week, the President announced a new program to inject TARP funds into healthy, smaller banks. Eligible banks must satisfy Treasury officials with their plan to extend credit to small businesses before receiving any funding. While expanding access to credit for small businesses is important, a growing number of individuals and organizations are echoing my call to allow TARP authority to expire on December 31st versus being extended by the Obama Administration until next fall.

While this new proposal to use billions in unspent TARP money may sound like a good deal for small banks and small businesses, we witnessed how injecting capital into healthy banks through the Capital Purchase Program did not translate into more lending. Without more details on the program, it is difficult to see how Treasury will force banks to lend TARP funds rather than holding those funds to strengthen their books. There's also the risk that if Treasury is indeed dictating lending requirements, their stipulations may be politically rather than financially motivated.

A recent report by the Government Accountability Office (GAO) raised issues regarding the effectiveness of TARP. In fact, the GAO auditors concluded that any stabilization in the financial markets that could be attributed to TARP may have been due to a number of other factors unrelated to this program. Additionally of concern to the American taxpayer is the fact that the TARP Inspector General has stated that it is unlikely that the taxpayer will even see half of what has been invested through TARP.

With an all time record $1.4 trillion budget shortfall that the federal government recorded this past year, not to mention the staggering $9 trillion that is expected to be added to our national debt over the next 10 years, we should be looking for every possible way to reduce spending and the dangerous amount of borrowing that is being passed along to future generations. In addition to pursing common sense cost saving when it comes to the continued increases in federal spending, we should allow TARP authority to expire on December 31st and use the roughly $300 billion in remaining funds to reduce our ballooning debt. Once the Administration has allowed the TARP authority to expire, it should lay out a plan to sell its stake in these private companies. The plan should allow some flexibility so the Treasury Department can divest these assets prudently. But there needs to be an aggressive timeline so that we can get out of these businesses as soon as possible.

In addition to legislation that I introduced earlier this year, the "Government Ownership Exit Plan", which would ensure that the federal government sells its ownership stake within a reasonable time frame - I am also pursuing other ways to reduce federal spending out of concern for the very real problems that we face when it comes to our nation's economic outlook.