TARP or SLUSH?

It wasn't long after the U.S. Treasury Department said a bailout program cost less than expected than headlines appeared on how the money might be spent.

It took, maybe, nanoseconds, for politicians and policy makers to twirl new scenarios in their heads, especially with mid-term elections coming up. On Monday, the official Treasury released a report declaring the Troubled Asset Relief Program was spending $200 billion less than expected.

It was before that, in fact, on Sunday, that House Minority Leader John Boehner, R-Ohio said the windfall -- defined as found money minus discipline -- should go toward deficit reduction.

By Tuesday, there were lots of lines drawn in the sand, most of them marking a spot on the continuum of deficit reduction on one hand and stimulus spending for jobs or to help struggling homeowners on the other.

"Unemployment is very real. People see it every day. If we are sitting at 10 percent unemployment and we are talking about balancing the budget, that's almost impossible to manage," Dean Baker, co-director of the Center for Economic and Policy Research told The Washington Post.

President Barack Obama, at a jobs summit at the White House Thursday said: "If we can't grow our economy, then it is going to be that much harder for us to reduce the deficit. The single most important thing we could do right now for deficit reduction is to spark strong economic growth."

Rep. Maxine Waters found support from House Financial Services Committee Chairman Barney Frank to spend $3 billion of TARP funding to help those who have lost their jobs keep their homes, a measure that would be attached to a regulatory reform bill scheduled for debate this week in the House. While not close to $200 billion, it is a signal that the TARP, which was criticized for straying from its purpose of helping banks could turn into a slush fund.

"The big mistake that people are making is treating the returns of TARP money as if it were a special kind of windfall. This should be about setting a pattern for the future and getting in the habit ... of constraining the deficit," said Garett Jones, senior scholar at the Mercatus Center at George Mason University.

Confronted with an economic contraction of 5.4 percent this year, Japan will spend $80.6 billion on stimulus measures, about 1.5 percent of the gross domestic product, The New York Times reported Tuesday.

The funding will go to a variety of initiatives, including $9 billion for environmental programs like help for consumers to buy energy-efficient appliances, and $6.8 billion for creating jobs.

About $39 billion will be spent on public projects, the Times said.

In market movement Tuesday, the Nikkei 225 in Japan fell 0.27 percent, while the Shanghai composite index in China lost 1.06 percent. The Hang Seng index in Hong Kong slid 1.18 percent, while the Sensex in India rose 1.44 percent.

In Australia, the S&P/ASX 200 lost 0.12 percent.

In midday trading in Europe, markets were down. The FTSE 100 in Britain fell 1.3 percent, while the DAX 30 in Germany dropped 1.06 percent. The CAC 40 in France lost 1.06 percent, while the pan-European DJ Stoxx 50 lost 1.16 percent.