November 2008 Archives

It's All About How You Count: Follow Up

The Department of Treasury has released its report on its activities resulting from the Emegency Economic Stabilization Act (P.L. 110-343) and, indeed, they are reporting what they spent as cash rather than as the "net present value" reported by the Congressional Budget Office. See Tranche Report to Congress and Tranche Report Appendices.

To sum up:

Congressional Budget Office reports $17 billion actually spent.
Dept. of the Treasury reports $115 billion actually spent.

The Congressional Budget Office (CBO) has released its October Monthly Budget Review. If one were to skim just the tables, one would get the impression that the TARP expenditures in October were $17 billion. In the paragraph below, however, the CBO notes that

"In CBO''s view, the stock investment and associated warrants should not be recorded on a cash basis but on a net present value basis, accounting for market risk, as specified in the Emergency Economic
Stabilization Act. CBO's preliminary estimate of $17 billion for the present value cost is included in its
estimate of $134 billion for the October deficit. However, CBO anticipates that the Treasury will report
the stock purchases on a cash basis. As a result, CBO estimates that the Treasury will report the October
deficit at $232 billion."

In short, we could see radically different claims of funds spent because of different methods of reporting the dollars committed. As always, you have to pay attention whenever someone starts quoting statistics...

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