Obama eyes 'selective' use of bailout dollars

WASHINGTON - December 7, 2009

Speaking in the Oval Office, Obama declined to say directly whether he would seek to redirect some of the repaid money from the $700 billion Troubled Asset Relief Program to jobs programs. He did say he would address the topic in an economic speech on Tuesday.

The president said the key question is determining whether the bailout money could be put toward selective job creation that meets the original intent of the law. He cited as an example directing bailout money to help small businesses get lending.

The president's comments came as Democratic leaders on Capitol Hill were looking to tap as much as $70 billion in unused funds from the Wall Street bailout to pay for new spending on roads and bridges and to save the jobs of firefighters, teachers and other public employees. Republican leaders are voicing strong opposition to that idea, saying all the money should go toward reducing the federal deficit.

In particular, Obama signaled that money from the $700 billion financial rescue program could be used as part of a jobs package for the purpose of helping small- and medium-sized businesses get loans to invest and ultimately to hire workers. Congress passed the Troubled Asset Relief Program in October 2008.

Obama will give a speech designed to flesh out his latest jobs-creation plan on Tuesday. He said he would address the use of bailout money at that time.

The Obama administration will lose $200 billion less than expected from the federal bailout program, according to a Treasury official who spoke on condition of anonymity because that new projection had not been released. That's down from the a $341 billion estimate of August. The lower estimate reflected faster repayments by big banks and less spending on some of the rescue programs as the financial sector recovered from its free fall more quickly than anticipated.

"TARP has turned out to be much cheaper than we had expected - although not cheap," Obama said.

He said some of the money could be devoted to deficit reduction.

Obama spoke briefly on the economy during an Oval Office appearance with Turkish Prime Minister Recep Tayyip Erdogan.

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