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A Project of The Annenberg Public Policy Center

Simpson’s TARP Turnabout

Rep. Mike Simpson falsely says in a TV ad that he voted to “repeal the Wall Street bailout and repay taxpayers.” It’s true that Simpson – who voted for the Troubled Asset Relief Program in 2008 — supported efforts to block the issuance of the second half of the $700 billion authorized for the program. But there was never a vote to “repeal” the law that created the program or the first half of the funding that was handed out.

And the banks did repay taxpayers. The government got back the money it provided to banks with interest, according to congressional budget experts.

Simpson, a Republican representing Idaho’s 2nd District, is seeking his ninth term in Congress. His campaign released the ad, called “Defense,” on March 13, in response to claims made by Bryan Smith, his tea party-backed opponent in the May 20 GOP primary.

Simpson was one of 263 House members who voted for the Emergency Economic Stabilization Act that President Bush signed on Oct. 3, 2008. It created a $700 billion Troubled Asset Relief Program designed to prevent the further decline of the U.S. economy by allowing the Treasury Department to buy or insure the assets of failing banks.

At the time of his vote, Simpson called the legislation a “necessary evil”:

Rep. Mike Simpson, Oct. 3, 2008: No one is happy about this legislation, but I am convinced that action is a necessary evil in order to keep small businesses afloat, keep retirees from losing their life savings and help end the growing credit crisis we now face. Senator Larry Craig carefully examined the legislation pertaining to the situation our country faces and came to the same conclusion: We cannot, in good conscience, allow ordinary Americans to suffer the consequences of the excesses of Wall Street.

And Simpson continued to defend his vote in 2010, during a town hall meeting and a televised debate. But now, in response to criticism from Smith and the conservative Club for Growth that he voted for the “taxpayer bailout of Wall Street,” the Simpson campaign is claiming that he actually voted to “repeal the Wall Street bailout and repay taxpayers.”

A statement announcing the ad cites a procedural vote Simpson cast on H.R. 384, the TARP Reform and Accountability Act of 2009. Simpson voted against final passage of that bill. But before that, he voted in favor of a motion to have the bill amended to terminate the program’s remaining $350 billion in funding, and also require the Treasury Department secretary to develop a repayment plan for all disbursed TARP funds. (He also voted for a nonbinding House resolution disapproving the release of the remaining TARP funds.)

But neither vote amounts to a full “repeal” of TARP, as the ad says. And taxpayers will be repaid for the money lent to banks, according to the Congressional Budget Office.

In a May 2013 update, CBO said it expected TARP to lose $21 billion of the $428 billion that was awarded. But CBO attributed the net loss to TARP spending other than the money given to financial institutions, which it expects to turn a profit for the government:

CBO, May 23, 2013: To provide support for financial institutions, the federal government disbursed $313 billion, most of which has already been repaid (see Table 2). CBO estimates a net gain to the government of $10 billion from those transactions — a net gain of about $25 billion from assistance to banks and other lending institutions, partially offset by a cost of $15 billion for assistance to AIG (see Table 3).

Simpson can fairly claim that he later voted to deny additional funding for TARP after becoming “disgusted” with how the money was originally handled. But that doesn’t change the fact that he voted for TARP before he began voting against it.

— D’Angelo Gore

Update, April 14: The Club for Growth Action released a TV ad attacking Simpson for claiming that he voted to “repeal the Wall Street bailout.” The ad cites this article and says: “Mike Simpson says he voted to repeal the Wall Street bailout. Fact-checkers call that ‘false.’ ” We did call Simpson’s claim false. However, the Club for Growth also incorrectly referred to Simpson’s procedural vote to amend H.R. 384 as a vote to “Repeal & Repay TARP” on its 2009 congressional scorecard. Simpson voted in line with the Club for Growth then, but, as we said, the vote did not amount to a full “repeal” of TARP.