When the CBO isn’t endlessly re-scoring Obamacare, it occasionally has time to take a look at other things the government is doing, such as TARP. CBO has released a new report on TARP spending confirming — as we pointed out after Obama proposed a “bank tax” to “recover” TARP money from the banks — that the banks don’t have the TARP money. AIG, GM, Chrysler do:

CBO currently estimates that the cost to the government of the TARP’s transactions—including investments, grants, and loans—completed, outstanding, and anticipated will amount to $109 billion. Much of that estimated cost is associated with the assistance provided to American International Group (AIG)—at a cost of about $36 billion—and the automotive industry—at a cost of about $34 billion. CBO estimates a very small net gain to the government from the capital purchase program, in which the Treasury purchased more than $200 billion in shares of preferred stock from hundreds of financial institutions.

Another interesting note from the report concerns government accounting and has some relevance to the ongoing health-care debate:

Both CBO and OMB value the TARP’s investments by discounting to the present the projected cash flows stemming from each investment, using a discount rate that captures both the time value of money and the premium that a private investor would require as compensation for the risk of the investment or commitment. The resulting “net present value” is the cost or gain projected for the investment and represents an estimate of its market value.

The text of the report specifies that “CBO and OMB value the TARP’s investments using procedures similar to those specified in the Federal Credit Reform Act of 1990 but adjusting for market risk as directed by the Emergency Economic Stabilization Act.” (Emphasis mine.)

Here’s why this is interesting: The Democrats have apparently received the score they wanted from the CBO on the House health-care reconciliation package. We don’t yet know how they did it, because we haven’t seen the CBO score* and the bill itself was put together in a back room. But one way they might have increased costs, cut revenues and still managed to get the score they wanted is by combining the health-care bill with a separate student-loan bill and dipping into the “savings” from the latter.

Why “savings” and not savings? As I explained on the home page today, the student-loan bill would probably save a lot less money than the Democrats are saying it will. The number they are claiming — $68 billion over ten years — comes from a CBO score that does not adjust for market risk. Sen. Judd Gregg asked CBO to re-run the numbers after accounting for the cost of risk and the cost of administering the program. The new estimate knocked $28 billion off the score.

What we have here is two different accounting standards for the same kind of program and no public policy reason for why it should be so. The Democrats are not required by law to use the more accurate savings estimate for their student-loan bill, so they won’t, even though Congress has recognized, with respect to TARP, that it’s a better way to account for government credit programs. This was sketchy enough when the Democrats were planning to spend the non-existent student-loan money on other education programs. But if what I’m hearing is accurate, they’re now using the “savings” to plug holes in their health-care bill. What a spectacle! I hope this health-care debate never ends.

* UPDATE: CBO’s letter is up on its web site, as noted below. Reading now.

UPDATE II: According to a quick perusal (I could be reading this wrong), Democrats have raided the ed bill to the tune of $9 billion to pay for health care. (Details can be found in Table 5.)

Thanks, students!