I spoke with Sen. Thune just before he headed to the floor to speak. The measure Thune is pushing — an amendment to terminate the Treasury Department’s TARP authority — has been introduced before, without success. But Thune is hoping the election of Scott Brown in Massachusetts will bring more senators on board with ending TARP.

“I’m hoping that’s the case,” Thune said. “I think this is going to be a real test of whether people here in Washington are listening to the voters. Clearly, what the people in Massachusetts were saying is: We’re uncomfortable with all the spending, all the borrowing, all the bailouts. This amendment would be a way of saying: We hear you.”

Thune points to the Democrats’ “TARP funds for stimulus” gimmick as an example of the dangers of not terminating the program. “What we’re really afraid will happen is that this thing becomes a political slush fund,” he says, “and already you’ve seen Democrats announce all kinds of designs on different uses for the money. We want to keep it from expanding and morphing and being put to uses Congress clearly never intended. We think we have to end it.”

The Thune amendment would take away Treasury’s authority to make any new investments or loans with TARP money, and it would commit all repayments from TARP to deficit reduction.

“Treasury has taken a very liberal, permissive view of what these funds can be used for,” Thune says. “They’re saying: We’re going to use it to create more small business lending. That’s their new justification to keep this program going. Even though that may be a meritorious use of the money, that is not what TARP was intended to do.”

Last year, I wrote about the administration’s plans to use TARP to increase small-business lending. The proposal would have funneled the money through the Small Business Administration, an agency with a long and checkered history of failed oversight and susceptibility to fraud.

The “TARP for small business” gimmick would be just as bad as the “TARP for stimulus” gimmick.

Thune admits that the slow transformation of TARP into a political slush fund started under the Bush administration. “This harkens back to the previous administration,” he says — and not just its decision to use TARP money to bail out the automakers. “[Former Treasury Secretary Hank] Paulson took this thing and used it to acquire ownership stakes in banks. They started taking equity positions. We now own banks, insurance companies, car companies, and now we’re losing money on the Democrats’ loan-modification programs. It’s gotten very far afield from what it was intended to do.”

Thune adds that “In what they’re trying to do, the Obama administration is making the previous administration look like pikers.”

I asked Thune what he would say to those who argue that the financial system might not be out of the woods — that the banks might require further bailouts. “Congress could always reauthorize the program if the need was great enough,” he says, “but I don’t think we should go down that path. We have created so much intervention in the market that I don’t think the market is behaving the way it otherwise might. Money is sitting on the sidelines because of all the uncertainty that the government interventions have created, and that’s without getting into health care, cap and trade and all the rest. Any expectation of a bailout takes away the natural corrections that the market makes and distorts natural risk-return considerations.”

I asked Thune what government can do to get the country back to normal. “It starts with ending TARP and getting these funds paid back,” he says, “and then doing no harm. The key right now to our economic recovery is: not grow the size of government, not raise taxes, not increase borrowing, and not get on this path of continuing to bail out individual industries. We’ve got to let market work. I understand the rationale of our actions last fall. There was a real concern that we were on the brink of a complete financial meltdown. But that should be the exception, not the rule. It is not conducive to a free-market economy.”