$700 billion: Blink, and it's gone

It's beginning to look like Hank Paulson didn't ask Congress for enough cash.

Published October 24, 2008 6:58PM (EDT)

$700 billion just doesn't stretch as far as it used to.

First, Treasury Secretary Hank Paulson asked for $700 billion to spend as he saw fit acquiring "toxic" assets from financial institutions. But when it became clear that his plan failed to inspire confidence in financial markets, he shaved off $250 billion for direct capital injections into banks. Then, on Friday morning, Vikas Bajaj reported in the New York Times that the Bush administration is working on a plan to "help struggling homeowners" by "shouldering some of the losses" on modified mortgage loans. Where would the money come from? You guessed it: "the 700 billion financial rescue..."

Now, fresh off the wire from the Wall Street Journal, we learn that "the Treasury Department is considering taking equity stakes in insurance companies."

The availability of government cash is drawing requests from all corners, with insurance firms, automakers, state governments and transit agencies lobbying for a piece of Treasury's pie. While Treasury intended for the program to apply broadly, the growing requests could rapidly deplete the $700 billion, an amount that initially stunned many as being quite large.

How long before there's nothing left in the kitty? And on a related note, I know that some Republicans are worried that a Democratic White House in conjunction with a Democratic Congress could usher in a new era of "big spending." But is it really conceivable that Democrats could spend money any faster than the Bush White House has managed?

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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