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On The Bailout Money

Having committed vast resources to fixing the economy, the Obama administration faces a question: If even more must be done to save the financial system, how will the government pay for it? The president proposed a 10-year budget that included money for a second stage of the financial bailout, but skeptical lawmakers cut it out. Christina Romer insists that the administration will still have the ability to act:

What the president has said is we're going to do what it takes — and one of the reasons [that] in his budget he said he put in that $250 billion placeholder is, he said, we don't know how much it's going to take. So we are absolutely going to start with this. Again, none of us has a crystal ball. It may be enough to do the job. Likewise, when we do the end, the stress test, and look at what banks need, the first thing they'll be told if they do need more capital: go to the private sector to raise it. That's another variable. We don't know. Maybe if we get enough of these toxic assets off, private capital will be happy to come in.

Steve Inskeep: I'm glad you mentioned the president's budget, because he did include, as you said, a placeholder basically for more bank bailout money if it were necessary, and as I'm sure you know far better than I, key senators have already said we're not putting that in our budget, we have no money for it anyway, and we're very dubious about it to begin with until we see a very specific plan from the administration. Are you sure you can get that money if you need it?

Again, the president has said we'll do what it takes. I firmly believe that Congress has the same attitude — that if it's clear that this is what it takes, I'm sure the president will work with Congress to do what we need for the American people.

You're confident that if it gets to that, that's your Plan B. You can go to Congress, you can get more money, you can expand this program or invent another program if you have to?

The important thing to realize is we have a comprehensive plan in place, and in the best case, this will be all that we need, or in a very plausible case. And then what I have great confidence in is that the whole government will do what it needs to get the American economy working again.

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