“This is not politics as usual,” President Obama promised during the 2008 campaign, but his TARP speech on Tuesday displayed even more duplicitous politics than usual. It was pure bait and switch. Congress passed TARP as emergency loans available to some banks–with the money to be repaid as soon as possible. Now President Obama, contrary to the written law in the bill, wants to use the repayments to finance new (or old) programs of his choice.
Even FDR was not that audacious. His “TARP of the 1930s” was the Reconstruction Finance Corporation (RFC), which made federal loans to troubled banks and industries. When those loans were repaid, the cash did not go directly into other programs (in particular FDR’s WPA campaign slush fund). Instead, as promised the RFC repayments became government receipts–used to offset the costs of other programs passed by Congress.
Character and trust are precious commodities and reneging on promises is one way to erode that precious trust–forever.
One final point–the president’s efforts to spark economic growth through tax cuts and huge capital gains cuts are to be commended. But here is an important caveat. Make these cuts permanent not temporary–and always make them across the board, not to targeted groups. Our Constitution promise “equal protection of the laws to all citizens,” and tax cuts need to be made with that in mind. Also, a capital gains cut limited to only one year will not help create the stable long-term investment climate that is needed to induce businessmen to take the risks that will ultimately create jobs and expand the economy.
– Burton Folsom Jr. is a professor of history at Hillsdale College in Michigan and author of New Deal or Raw Deal? He blogs at BurtFolsom.com.