TARP Spending: "A Violation of the Law"?
11:37 AM, Dec 8, 2009 • By MATTHEW CONTINETTI
Democrats want to use "leftover" TARP money to pay for a "second stimulus." Obama outlined his proposals in a speech today to the Brookings Institution. There will be a debate over the merits and demerits of the president's various policy preferences. But it looks like there will be debate over the legality of spending TARP money on non-TARP-related projects, as well. Congressman Mike Pence:
As it happens, lately I've been reading Robert Kagan's 700-page history of American involvement in Nicaragua from 1977 to 1990. One of the lessons of the book -- stick with me, here -- is that presidents ought to pay extremely close attention to the text of legislation. To get into the weeds a bit, the Reagan administration interpreted the original Boland Amendment to mean that America could fund the contras but not anything that would directly lead to regime change in Nicaragua. This was always something of a stretch, however, and by 1984 the realities on the ground in Nicaragua and mounting domestic opposition to the Reagan administration's Sandinista policies led to a huge D.C. battle over American aid to the contras and whether the White House had violated the law.
TARP, in my opinion, was necessary to forestall a major contraction of credit and a collapse in the global financial system. That was its original purpose. But the program has changed over time. For the president to repurpose the legislation once more, in the service of a partisan domestic agenda, would open up a major legal and policy debate. A debate that he may not win.