Gov't projects $6.5M in bailout costs through Jan. (Associated Press)

By Martin Crutsinger, AP Economics Writer

WASHINGTON - The government estimated Tuesday that it will spend $6.5 million by the end of January in salaries and other administrative costs for the $700 billion financial rescue program.

The Treasury Department estimate was part of the latest update it's required to provide Congress on the operation of the largest government bailout effort in history.

Treasury projected that it would spend nearly $1.2 million on salaries through the end of January and more than $5.3 million on other expenses. The biggest expense category was for "other services," which amounted to nearly $5 million.

The report said Treasury expected to have made obligations totaling nearly $26.6 million by the end of January with the biggest part of that being more than $24.4 million for "other services," which covers the contracts the department has awarded to accounting and law firms to help administer the program.

The new report, which updates the activities in the rescue program since the first accounting was provided to Congress on Dec. 5, provided details on the emergency loans that the Bush administration decided to provide to the auto industry from the bailout program after Congress was unable to pass legislation to help the automakers.

The Bush administration announced that it would lend $17.4 billion to General Motors Corp. and Chrysler LLC in an effort to buy them time to reorganize and avoid having to file for bankruptcy.

Treasury Secretary Henry Paulson has said that with the auto loans, the administration has obligated the first half of the $700 billion rescue program and he has called on Congress to authorize use of the second $350 billion.

However, the administration said Monday that it has not yet submitted to Congress a report required by law that would spell out how the second $350 billion would be used.