WASHINGTON, Dec. 7, 2009— -- The $700 billion financial bailout has caused controversy and outrage from the moment it was enacted last fall, an attempt by the Bush administration to save the financial system from a collapse that could imperil the overall economy.
A year later, critics argue, the bailout has only helped Wall Street, not Main Street.
But the Obama administration Monday revealed that the program's 10-year cost to taxpayers would be $200 billion less than expected -- and now a chunk of the remaining funds could be used to help put Americans on Main Street back to work.
"We've been very successful in bringing stability back to the financial system and that's going to create very substantial resources for the president and the Congress to devote to the immediate priorities to the country," Treasury Secretary Tim Geithner said in an interview with ABC News' Jake Tapper.
The administration's immediate priorities include job creation and continuing to stimulate economic growth, issues that the president will address in a speech on Tuesday.
Obama is expected to focus on three main areas: energy, small businesses and infrastructure. House Democrats are reportedly eying a $70 billion chunk of bailout money to use in any jobs growth effort.
"Having gotten the financial crisis under control, having finally moved into a positive territory when it comes to economic growth, our biggest challenge now is making sure that job growth matches up with economic growth," the president told reporters today.
The administration is exploring whether some of the TARP money can be used to stimulate job growth
"The question is, are there selective approaches that are consistent with the original goals of TARP," the president said.
One area the president may push in his speech on jobs Tuesday is using the money for loans for small and medium-sized businesses.
"They cannot get the loans they need to make capital adjustments that would allow them to expand employment," he said. "And so that's a particular area where we might be able to make a difference."
Creating Jobs or Paying Down Deficit a Higher Priority?
Republicans have argued that any money left in the Troubled Asset Relief Program should pay down the nation's soaring deficit, rather than being reallocated for another government rescue plan.
The nation's budget shortfall hit a record $1.4 trillion during the 2009 fiscal year that ended Sept. 30.
"For this president or this Democratic Congress to proposing using TARP funds for anything other than deficit reduction is simply a violation of the law," said Rep. Mike Pence, R-Ind., chairman of the House Republican Conference. "I think the American people know you can't pay off debt with debt."
"TARP has served its purpose. TARP ought to be ended," former GOP presidential candidate Mitt Romney said Sunday on CNN's "State of the Union." "We've got hundreds of billions of dollars there that is being used as a slush fund by Secretary Geithner and the Obama administration. Stop the TARP recklessness at this point and get ourselves back to creating jobs by encouraging businesses to grow, expand their capital expenditures, and hire."
Geithner dismissed that charge and said that the Obama administration has not "written one check to a major bank."
"Because we forced banks to go out and raise private capital, a good market-friendly strategy, we've been able to help stabilize this financial system at much lower cost to the American taxpayer," Geithner said.
But even if the administration's possible use of the Wall Street bailout to spur job growth on Main Street manages to boost the program's popularity, there are still numerous question marks hanging over some of TARP's other goals.
As the bailout's chief watchdog, Neil Barofsky, told ABC News in an interview last month, "[TARP] has made very little progress with some of its other aims such as foreclosures, restoring lending to small business to spur employment. ... It hasn't succeeded in those areas."
Moreover, the bailout still does not look like it will turn a profit for taxpayers.
Even if the administration believes it will rack up a $20 billion profit from its investments in the banks, it expects to lose roughly $30 billion on investments in AIG and another $30 billion on investments in automakers General Motors and Chrysler.
Financial Bailout Couldn't Be Done 'Without Some Risk of Loss,' Geithner Says
"You don't solve the financial crisis without taking risk, some risk of loss, but those losses are going to be dramatically lower than we expected," Geithner said.
The president also acknowledged that even though TARP turned out to be "much cheaper than we had expected," the program is still "not cheap."
Geithner would not get pinned down on how much of the TARP funds American taxpayers would get back.
"I think we're going see, again, a very good return for the American taxpayer on the investments in the banking system and much lower losses outside the banking system than anybody anticipated," Geithner said today.
Whatever the ultimate cost to taxpayers, policy-makers such as Geithner and Federal Reserve chairman Ben Bernanke have argued that by averting a financial system meltdown, the bailout was a wise move.
"These policy interventions succeeded in averting a global financial meltdown that could have plunged the world into a second Great Depression," Bernanke said in a speech today at the Economic Club in Washington.
Around 15 months after the bailout was enacted, the debate over it is far from over.
The complete new TARP numbers are not expected to be released until Wednesday when a Government Accountability Office report is delivered to Congress, a Treasury official said.
Linus Wilson, an economics professor at the University of Louisiana at Lafayette who has done numerous analyses of the bailout, told ABC News that the administration's contention that TARP will cost $200 billion less than expected was "really just smoke and mirrors."
"The administration is saying this is money we're not going to project that we're going to use, but before they probably weren't going to use it anyway," Wilson said. "It's not like they're changing the policy or the amount of money they're going to use."