Through the miracle of modern communications technology, at 10AM this morning the Congressional Budget Office released the text of CBO Director Peter Orszag’s statement, Federal Responses to Market Turmoil, before the House Budget Committee hearing held today. Now, 20 minutes later in Beijing I have read it and am sending it to several thousand subscribers back in the US and elsewhere. I love this stuff.
Peter’s testimony discusses several of the complications we encounter when attempting to put a taxpayer price tag on the proposed fix for the credit crisis, the Troubled Asset Relief Act of 2008. The proposal would give the Treasury Secretary unprecedented power over which assets to buy, from whom, and at what prices at his discretion. Because of this it is not possible to estimate the cost to taxpayers. Because the purchases would be made under fire sale conditions and the sales, presumably, made under more normal conditions it is very possible that taxpayers might make a net gain on the program.
I suggest that you read Peter’s testimony to get familiar with some of the issues that will arise in Congressional discussions this week. He does not advocate for or against the program. I think he does a good balanced job.