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Will Democrats Use TARP Funds for Jobs Bill?

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White House spokesman Robert Gibbs told reporters today that President Obama will likely back using some portion of the $700 billion in TARP bailout funds during a speech on the economy next Tuesday.

That idea isn't sitting well with House Republican Whip Eric Cantor (R-VA), who released a statement this afternoon arguing that such a move would be against the law.

"The President and Speaker Pelosi need to recognize that TARP money was borrowed from the taxpayer to deal with a dire emergency, and now it must be returned," he said. "In fact, current law states that returned TARP funds are to be used to reduce the debt – not more spending preferred by the President. This country is in debt, and the only responsible action is to pay it down, not preserve and expand it."

"TARP funds borrowed from the taxpayer should not become a slush fund for the political whims of Washington," he added.

In his gaggle with reporters today, Gibbs said that President Obama "thinks we should and must do everything in our power to create an environment for job growth and job creation," as the Washington Post reports.

Asked if that means the president will discuss using TARP funds for job creation on Tuesday, Gibbs said, "I think that's likely."

With the unemployment rate at 10 percent and members of Congress nervous about their 2010 reelection prospects, Democrats and the president have begun to spotlight efforts on jobs. Mr. Obama hosted a jobs summit at the White House Thursday and travelled to Allentown, Pennsylvania today to stress his administration's commitment to job creation.

Congressional Democrats, meanwhile, are working to craft a new jobs bill they can point to when pressed by constituents about the struggling economy. The president appears to be considering endorsing funding that jobs bill with funds from the Troubled Assets Relief Program, or TARP.

Bank of America became the latest bank to announce it was returning its TARP funds, promising this week to pay back $45 billion; in addition, according to the Post, about $139 billion of the TARP money has not been allocated.

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