Barofsky fires back at Treasury, says $24,000,000,000,000 estimate sound

posted at 9:00 am on July 25, 2009 by Ed Morrissey

The Special Inspector General for TARP, Neil Barofsky, made headlines this week when he estimated that the Obama administration had committed itself to spending as much as $24,000,000,000,000 to fix the American economy.  The Treasury fired back at its own SIGTARP, saying that Barofsky inflated the numbers and that they had no intention of spending almost twice America’s annual GDP.  In an interview with ABC’s Jake Tapper, Barofsky explains that the White House currently has dozens of programs dispensing cash, and that the caps on all of those add up to the $24-trillion mark:

Barofsky told us that the Treasury Department “is not being transparent with respect to the TARP,” the $700 billion in funds (and more) the government is using as loans and bailouts to help stabilize the financial markets. “They’ve failed to adopt some very basic recommendations we’ve had toward transparency,” he said.

Called the “SIGTARP,” Barofsky appeared before Congress this week and told them that the government’s commitment to fix the financial system could potentially reach $23.7 trillion, and criticized the Treasury Department for calling his team’s estimate “inflated.”

“I think that the Treasury Department ought to read the report before they make comments, at least the spokesperson’s office,” Barofsky said. “Our methodology is laid out in black and white in the report. … As far as the numbers being inflated, where do you think we got the numbers from? We got it from the Treasury Department, we got it from the Federal Reserve. … If these numbers are inflated, it’s because they inflated them when they put them out in the public, not because of us.” …

“Perhaps their criticism is that we dare to do math,” he said. He added that his team tried to convince the Treasury that they were wrong, and that recipients should be required to report on how they use the federal funds, and those should be shown to the American people so that they know it’s “not being thrown into a black hole.”

Barofsky comes close to getting the problem right.  He’s doing math.  The White House calculates.  There’s a big, big difference.

I seem to recall when Barack Obama promised the most open and transparent administration ever.  Since his inauguration, Obama has fired one IG for daring to oppose a sweetheart settlement with a political ally, allowed another to get dumped by the agency she oversaw, and now have publicly feuded with Barofsky.  Earlier, they tried to limit his authority by claiming that Barofsky didn’t work independently of Treasury, which got a stern letter from Senator Charles Grassley.  It looks as though the White House has declared war on transparency, and especially the IGs who exist to provide it.

Tapper has the interview up as a podcast; be sure to download and listen to it.


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Comment pages: 1 2

Barofsky – my new hero.

redfoxbluestate on July 25, 2009 at 3:16 PM

the problem is that it emboldens people like ed to write things like “the Obama administration had committed itself to spending as much as $24,000,000,000,000 to fix the American economy.” for the reasons linked above, it’s absolute nonsense.

sesquipedalian on July 25, 2009 at 10:49 AM

Actually, if you read the SIGTARP Report at page 137 of section 3, the authors tell us what their methodology is and why they made an effort to pull in various undocumented, off-balance sheet items in the “Federal balance sheet.” The report specifically mentions guarantees by the Federal Reserve and unrecorded Federal balance sheet items, the potential overlap of items, and Total Potential Support items.

When one considers that the value of all derivatives in all financial markets worldwide is something like $565 TRILLION
(see the third installment of The Ascent of Money towards the end for this estimate; currently available for free on PBS.org) and that the GDP of all countries worldwide is merely $63 to $65 TRILLION (see wikipedia for this one – that is good enough for the rough estimate) you can see that hedge funds are making money on nothing but AIR! If the Fed is similarly making guarantees that they cannot fulfill from current receipts but must borrow to do so, then one would expect either the interest cost on borrowing to go up or the guarantee to be completely unfunded (like California).

Increased interest costs are inflationary and also, at the same time, cause a devaluation of the USD on foreign exchange markets. The spending that the administration wants to initiate is going to be truly all the Change that socialists might Hope for. Hopey & Changey. And EXPENSIVE!

Are you ready for tent cities and lawlessness in national parks?

ExpressoBold on July 25, 2009 at 3:59 PM

And now, Obama wants to set up an “independent body” to oversee the health care takeover. If one of these “independents” report any problems, do you think any changes will be made? Yes, a new “independent” person.

djaymick on July 25, 2009 at 6:54 PM

Are we heading for another Saturday Night Massacre scenario?

PLEASE!

I want to see all the fired/discredited investigators standing on the steps of Congress protesting!

PattyJ on July 25, 2009 at 7:01 PM

This number is derived from adding the maximums, the “caps” on all these programs. These “caps” are the financial commitments that have been made.

For someone whose handle is based on the term for really long words, you seem to be having trouble with the phrase, “as much as.”

ThereGoesTheNeighborhood on July 25, 2009 at 12:18 PM

the point is that it’s like calculating the costs of health care reform and assuming that all insured Americans will be sick at once – it’s possible in theory but the result is useless as a true measure.

sesquipedalian on July 25, 2009 at 12:42 PM

It’s a worst-case scenario, but it’s exactly as described: the total amount of money the government has committed itself to spend if necessary. That is not an irrelevant figure to bear in mind.

ThereGoesTheNeighborhood on July 26, 2009 at 2:38 AM

Hussein’s new enemies will produce the birther facts, and get that jackass put out of office. Hussein can’t piss off his own insiders.

leftnomore on July 26, 2009 at 3:10 AM

If I am stupid enough to co-sign a loan for, say, $50,000…I am on the hook for $50k. I may end up putting nothing into it, or I may have to assume almost all of it, depending on the character and ability to repay of the person who somehow convinced me to co-sign that loan.

But as a matter of legality…I am on the hook for $50k.

Right now, $24 trillion is what the USG is on the hook for…and if everybody bails out, and the stimulus fails to provide that “jolt” to the economy, and if joblessness goes above 15%…yeah, we could be trying to pay this thing off for the rest of the century. Maybe all those nations who bought our notes might be willing to “forgive” the debt. But, if it comes to that, we’ll have become a Third World economy.

If there was ever a reason why the Obama Administration and the Dem Congress raced into the stimulus, the energy bill, cap and tax and this “health care” bill, it was to prevent anyone from actually having access to the figures, actually looking at the end game, and maybe being able to forestall this overly gross commitment of American wealth.

coldwarrior on July 26, 2009 at 5:48 PM

This president is going to turn us into someother 3rd world country. It’s been his plan along. It starts with the banks, insurance companys(any and all), car industry, healthcare, energy and wait food will be next.
It’s time to get a tea party in motion for July 4th, 10 in DC!!

mmcnamer1 on July 27, 2009 at 12:03 PM

Comment pages: 1 2