I stumbled across an opinion piece in at the Wall Street Journal today. The article "Obama Wants to Control the Banks", by Stuart Varney tells of how repayment of TARP money is being rejected by the Obama Administration from institutions it wishes to control.
After getting over the initial shock of this, it got me thinking. Because these banks and car companies are on the hook with TARP and bailout money, the government now has unprecedented say in all of these companies' affairs. The government can dictate what cars to make, who they should merge with and soon who the banks should lend to.
I also see another reason why the Administration would want to reject repayments, they could have a possible new revenue stream for government programs. Last week, Treasury Secretary Timmy Geithner asked for outrageous new powers for the Treasury. The new powers would literally give the government direct control of all kinds of activities in companies, all in the name of managing "systemic risk" (a term still yet to be fully defined).
If given these new powers, what would stop the government from running these newly controlled companies in such a way, that they would be profitable enough to do the government's bidding and make interest payments, but never profitable enough to pay off the principle of their loans? Could the interest payments not serve as a new source of revenue? Revenue that could help pay for a massive entitlement program like a single payer health care system? One of the biggest arguments against a single payer system is the cost. But what if the cost was eased by millions in interest payments from government run companies? Would not the argument and the taxpayer outcry go away or be significantly diminished?
Now imagine such revenue becoming regular and necessary. These banks and car companies could never be "set free" without causing "systemic risk" (there is that term again) to the economy in the form of jeopardizing the health care system or massive increases to the taxpayer. Even with Republicans in full control of the government, such a knot could not be untied without major disruptions and Democrats would have a valid argument against it. In effect we would be permanently stuck with a socialist system.
Obama and the Democrats have a once in a generation chance of making their long held dreams come true. If they are successful in executing them, why would they not try to make those changes permanent?