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Budget office doubts bailout profitability

Bush, Obama tout taxpayer returns

By Jon Ward (Contact) | Tuesday, October 14, 2008

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President Bush, Barack Obama and other leaders from both major political parties have made recouping taxpayer dollars a key selling point for the $700 billion economic-rescue package, but the president's budget office says it doesn't think the plan will turn a profit.

A senior official at the White House Office of Management and Budget said in an interview that it is unlikely that all of the assets purchased by the government will result in positive earnings.

"You have to make a lot of assumptions in order to conclude that we're going to make a profit on these purchases," said the official, who requested anonymity. "There will be some purchases where we profit, but we're not predicting that the program as a whole would be [profitable]."

When Mr. Bush announced the rescue plan Sept. 19, he said, "We expect that this money will eventually be paid back."

Since then, however, the president has been more cautious, specifying that "much, if not all," of the $700 billion will be regained.

Mr. Obama, the Democratic presidential candidate, has gone further than Mr. Bush in suggesting a gain for the taxpayer.

"If this is managed correctly - and that's an important 'if' - we will hopefully get most or all of our money back, and possibly even turn a profit on the government's intervention, every penny of which will go directly back to the American people," Mr. Obama said Oct. 1, the day the Senate passed the legislation.

Republican presidential candidate Sen. John McCain has said little publicly about regaining taxpayer dollars and calls the plan a risky investment, a campaign official said.

"He is more bridled in his willingness to make an optimistic promise to voters that they're going to see a dollar-for-dollar return on this rescue plan," said the campaign official, who spoke anonymously to allow greater frankness. "John McCain's been optimistic and hopeful, but [he's] certainly not gone to the lengths of assuring taxpayers or voters with any kind of promise.

"He recognizes the reality that an investment in a loan like this comes with some degree of risk."