NEW YORK ( TheStreet) -- President Obama, having already stretched his authority to spend taxpayer money on the banking bailout, is now embarking on a TARP-for-Jobs program. That's the tone he set with his jobs speech yesterday and the various other commentary from administration officials sent out to talk up the plan. Obama said the U.S. needs to spend its way out of recession and can afford to do so because recent estimates showed the Troubled Asset Relief Program, aka TARP, will cost $200 billion less than previously thought. Conveniently, estimates for the cost of this next round of stimulus spending are also $200 billion. The plan, described as a "Grab-bag Approach," prescribes more infrastructure spending, tax credits and tax breaks for small businesses and extensions of other programs included in his previous stimulus package. The TARP-for-jobs concept is already causing a stir among Congressional leaders, in particular Republicans, who are chafing at the growing federal deficit and the big-government agenda of the Obama administration. Of course, we know that Obama is politically savvy enough not to simply redeploy TARP funds - though we've seen that he's perfectly willing to stretch the authorized uses of those funds by investing directly in banks and adding automakers to the dole. Most likely, the president will use the lower TARP costs as a political balance against new spending he asks Congress to approve. It will be classic political slight of hand -- the TARP money will go to reducing the deficit so that more money can be spent on jobs without increasing the deficit.
So far, we've not seen great results from government spending on the job front, so the skepticism may be justified. The Obama administration's own accounting of its first stimulus package showed that stimulus jobs don't come cheap. Obama argues that the first round of spending worked because the U.S. skirted a depression and the economy stabilized, so the second round is the booster shot that leads to full recovery. It's going to be a tough sell. If you believe Obama can still work his magic, then we may start seeing the government-induced benefit that many major banks have been enjoying spread to other sectors as well. Whether or not Obama spends TARP funds directly, this could be like TARP for industrials. If Obama sticks to the focus on big, publicly traded players like he did with the bank bailout, it could be a boon for the likes of Caterpillar ( CAT), United Technologies ( UTX) and Deere ( DE). We could also start seeing industrials like GE ( GE) and Fluor ( FLR) reporting outsize profit similar to Goldman Sachs ( GS) and JPMorgan ( JPM). Eventually, those profits will translate into growth and when the big companies start hiring, it will have a trickle down effect on all the smaller companies that orbit them. I'm sure we'll be seeing massive job creation in the banking industry any day now. If that doesn't work, then maybe the government should try just getting out of the way and letting the private sector do its thing. --Written by Glenn Hall in New York. Get TheStreet on Kindle or follow us on
Twitter and become a fan on Facebook.