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.
One has to keep in mind the composition of the GDP. A lot of it is made up of the 'service sector' or maintenance, necessary but does not increase the wealth of the country. It cannot be counted on to pay bills...
ReplyDeleteWhat? All parts of the GDP reflect wealth.
ReplyDeleteAnd of course when you're dealing with that scale a little is bound to get lost here and there. Enormous fortunes will be made.
ReplyDeleteLost in all of this I think its tough to remember that most of this money came not from Congress, but from the Fed.
ReplyDeleteAUDIT THE FED NOW:
ReplyDeletehttp://www.campaignforliberty.com/