Where does the government get this money? From the Treasury. Where does the Treasury get this money? It prints it.
You may ask how the government is spending that $700 billion. The Treasury Department's Troubled Asset Rescue Plan -- approved by Congress and signed by President Bush on October 3rd as the Emergency Economic Stabilization Act of 2008 -- spent $350 billion by mid-December 2008. Instead of buying mortgage-backed securities, $250 billion went to buy stock in troubled banks and provide a bailout to the auto industry. Treasury Secretary Henry Paulson wants Congress to release the last half of the recovery fund to further protect financial markets, but that allocation may not happen until Obama takes office on January 20th.
