One of the reasons offered for the upset victory of the Republican candidate to take Ted Kennedy’s seat in the Senate was Americans’ anger about Fed deficit spending to “bail out” the banks and stimulate the economy. There is a widespread concern about the large and growing national debt that will be paid by “our children and grandchildren.”

Given this powerful distress in the body politic it seems to me that the Obama team whould do well to carefully explain to the public the need for deficit spending to overcome the “Great Recession.” Most economists agree that the TARP plan of 2008 and the Stimulus Plan of 2009 were necessary to save our economy.

In this atmosphere the Obama team would do well to explain that the TARP plan did not cost the taxpayer one dime. It was totally funded out of borrowed funds and most of the expenditure under the program has been paid back. The remaining TARP obligations will cost about $2-3 billilon a year to maintain and the US has already earned several billions of dollars in interest payments on this exposure.

And while the Stimulus Plan will not be “auto-financed,” it would be worthwhile explaining that, at the current cheap cost for the Feds to borrow, as little as 1%, borrowing now to pay for things that will cost more in the future makes good economic sense.

But rather than show that the TARP program worked and cost nothing to conduct, Obama has now asked for a special tax on the banks to, “pay back the taxpayers for bailing out the banks.” In this case the call for the tax is nothing more than a “populist political” move.

The President would have been better served if he stated the reason for taxing the banks in the words of the legendary gangster John Dillinger, who, when asked why he robbed banks, replied, “Cause that’s where the money is.”