When Bush Press Secretary Dana Perino announced yesterday that the administration would consider using TARP to bail out the auto industry more than a few bloggers began asking nettlesome questions such as “Can Treasury actually do that?” or “Can this be done under the existing legislation?” and “Has anyone actually read TARP?”
The Government Accountability Office seems to have conditionally blessed a bailout which can be done under TARP:
“The decision to use TARP funds would mark a shift in the White House’s position that the $700 billion should be used only to stabilize the financial sector. However, the head of the Government Accountability Office testified last week that the wording of the legislation was flexible enough to authorize loans to the auto industry.”
However, the GAO still refers to Social Security as a “trust fund” so it is with a grain of salt that we should let their opinion go unchallenged. At the risk of suffering an acute case of MEGO ( My Eyes Glaze Over) I read H. R. 1424 looking for any basis (flexible wording) that Treasury could claim for using what otherwise appears to be an explicit appropriation (and folks, it’s a whale of an appropriation) meant only for the financial industry.
There doesn’t appear to be any language in the legislation that would allow Paulson or later, Timothy Geithner, to use these funds for an auto bailout but I’m obviously no expert. It does occur to me though that an expert won’t be needed to make this TARP contortion actually happen. All that is required is a Congress that looks the other way while another piece of legislation gets sliced and diced after the vote for the sake of political expediency.