A series of bailouts, bank rescues and other economic lifelines could end up costing the federal government as much as $23 trillion, the U.S. government’s watchdog over the effort says – a staggering amount that is nearly double the
nation’s entire economic output for a year. If the feds end up spending that amount, it could be more than the federal government has spent on any single effort in American history.
Now, defenders of TARP and other bailout programs proclaim that the figure that Barofsky uses is a worst case scenario. Fair enough, TARP and all the other bailouts might "only" cost $12 trillion.
Some have characterized this as showing just how massive the problem is. That's nonsense. Our GDP in a year is about $14 trillion. This started out as a way to try and stop the bleeding. Then, the government couldn't say no to anyone. The automakers came with their hands out and we gave them money. AIG came with its hand out and we gave them money. Struggling borrowers came with their hands out and we gave them money as well.
What this number really puts into perspective is the size and scope of the massive government expansion that has occurred since September. Bailouts, stimulus, TARP, TALF, loan modification programs all have a real cost. That cost may not reach $23 trillion but it is staggering.