White House expected to propose using that money to fund massive job creation program, according to officials.
The Obama Administration is expected to slash the estimated cost of the Troubled Asset Relief Program by $200 billion, effectively paving the way for what is expected be a massive federal jobs program.
The latest projection, which will be officially unveiled by the White House Tuesday, would cut TARP's price tag to $141 billion, according to a Treasury Department official.
The administration is expected to propose using a portion of that money to fund a national jobs creation program, White House officials told CNN.
President Obama will likely recommend using the $200 billion to fund a series of projects, including building bridges and roads, and weatherizing homes, as well as providing further aid to the unemployed and to small businesses.
Such a move is certain to draw the ire of Republican lawmakers, who have railed against using any leftover bailout funds or money that has been paid back by banks for any new projects.
Many have not only proposed shutting down the program altogether, but argued that any unallocated TARP funds should go toward cutting the nation's bloated deficit. Treasury currently estimates that the annual deficit for fiscal year 2010 will hit a record $1.5 trillion.
"I think that we ought to cut spending, first and foremost," House Minority Leader John Boehner, R-Ohio, said Friday, following a House Republican meeting on job creation, aimed at rivaling a similar summit sponsored by President Obama.
Obama: Use TARP for job creation
White House projections on the cost of TARP have been coming down in recent months.
In August, the administration had projected that the long-term costs of running TARP would reach $341 billion.
That outlook has improved as banks have raced to repay government aid. To date, banks have returned some $71 billion to taxpayers, according to the Treasury Department.
And that number continues to grow. Last week, Bank of America (BAC, Fortune 500) announced plans to repay the $45 billion in taxpayer aid it received over the past year.
Additionally, taxpayers have pocketed another $10 billion in interest payments stemming from these investments, according to recent Treasury Department estimates.
However, the American public is still expected to incur a massive loss in the end -- the question is just how much it will be. A separate estimate issued earlier this year by the Congressional Budget Office warned that TARP will ultimately cost taxpayers approximately $159 billion.
Not only are there considerable costs associated with running TARP, but many of its subsidiary programs are widely viewed as losing propositions.
For instance, the $27 billion that has been spent on the administration's "Making Home Affordable" program, is money that taxpayers are unlikely to see ever again according to the Office of the Special Inspector General for TARP, the watchdog group created to monitor the program.
At the same time, there have been significant doubts whether the government will ever be able to recoup the money spent rescuing companies like General Motors, Chrysler and insurer AIG
TARP repayment doesn't help consumers
AIG, for example, has said it has not generated enough earnings to repay the remaining $62 billion it owes the government, despite recording two straight profitable quarters.
And last month, the government effectively lost the $2.3 billion it had invested in small business lender CIT Group, after the company filed for bankruptcy.
Treasury currently has $133 billion invested in both large and small lenders, under TARP's capital purchase program, which was launched last fall to get credit flowing in the U.S. economy again.
By David Ellis, CNNMoney.com