Input: Wall Street bailout could open new doors

The federal government's $700 billion financial bailout obligation might result not only in reductions to non-bailout federal contracting, but also the creation of new opportunities for contractors to oversee the Wall Street rescue package, according to a new report from Input Inc., a market research firm in Reston, Va.

Congress authorized purchase of up to $700 billion in troubled mortgage assets to stabilize the nation's credit markets, an amount close to the projected fiscal 2008 expenditures on the Iraq War. A substantial portion of that amount will be offset by sale of those assets but the amount, and timing, of those sales is not known.

Since the bailout is so massive in size, federal agency decision-makers may be forced to limit new spending and cut programs, said Deniece Peterson, a senior analyst at Input.

Democratic presidential nominee Sen. Barack Obama has pledged a line-by-line budget review, and Republican nominee Sen. John McCain wants to freeze discretionary spending to perform top-to-bottom reviews.

"This puts a hamper on agency spending but may free up funding for the policy areas that both candidates are committed to addressing ? health care, energy independence, and tax reform," Peterson wrote. The outcome may be decreased spending on underperforming or costly programs, she added.

Some contractors will benefit from opportunities to help run the Troubled Asset Relief Program within a newly established Office of Financial Stability and within the Office of the Special Inspector General for the program, Peterson said.

About the Author

Alice Lipowicz is a staff writer covering government 2.0, homeland security and other IT policies for Federal Computer Week.

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