TARP’s shelter for taxpayers lacks security

When the Troubled Asset Relief Program — the federal effort to shore up failing companies — was passed last year, we wondered and worried:

What if the U.S. government was putting taxpayer money into bad investments? What if the taxpayers ended up taking a bath, and the government ended up losing money it could have used for other, more productive programs?

Well, the sky isn’t falling yet, but …

The Congressional Oversight Panel estimates that most of the $23 billion initially paid to General Motors Corp. and Chrysler LLC under TARP last year will never be recovered. 

Prospects of getting that money back, the oversight group says, were predicated on an unrealistic expectation that the two companies could turn themselves around and generate not just profits, but extraordinary profits.

And this addresses just the bottom-line pragmatic side of the problem: With U.S. taxpayers holding 10 percent of Chrysler and 61 percent of GM, how are they going to get their money back? It does not begin to tackle the deeper danger of U.S. ownership of private companies, the undermining of the free-enterprise system.

Meanwhile, although several banks that received TARP money are talking about repaying some funds, many others are said to still be in trouble. Last month, the same oversight board reported that many banks still hold toxic assets.

By some measures, the economy is improving. But if there is another downturn triggered by growing unemployment (Richmond just announced another 600 state government layoffs), then the commercial real estate market could tumble after the housing market, creating another wave of bank failures.

The obligation of taxpayer money toward upholding banks and auto manufacturers is just part of the story. The loss of this money, so perilously at risk, would drag the national debt still further into the red. The debt is now nearly $12 trillion, an astounding number. Behind it is a list of “unfunded liabilities” such as Social Security and Medicare payments. According to the U.S. Debt Clock, each American now owes more than $38,000 as his or her share of the existing debt, and another $192,000-plus in future liabilities.

Trillions of dollars of debt are now held by foreign entities, giving them a measure of control over U.S. economic policy. China is such a big player that Washington already has had to ask for Beijing’s help in protecting the dollar.

Never mind “health care reform” for the individual. We cannot shoulder this kind of debt and stay healthy as a nation.

Unless Washington reverses course, this country is headed for even bigger trouble than we have currently.

There is of course a chance that if everything — everything — goes as hoped, the U.S. could pull out of this decline. But we are teetering on a very thin edge.

No, the sky isn’t falling today. But if it crashes down tomorrow, think twice about seeking shelter under a TARP.