Tuesday, July 21, 2009

Bailouts Could Cost U.S. $23 Trillion

According to a new estimate from Politico.com the Federal bailouts from the past year could end up costing a staggering $23 Trillion. However, the author admits that this number is a “worst-case scenario.” Neil Barofsky, the special inspector general for the government’s financial bailout programs, also asserts that this total is unlikely and that a number of problems would need to emerge forcing the government to spend more. According to Barofsky, the government has spent about $2 Trillion so far.

Still, the enormity of the IG’s projection underscores the size of the economic disaster that hit the nation over the past year and the unprecedented sums mobilized by the federal government under Presidents George W. Bush and Barack Obama to confront it.

In fact, $23 trillion is more than the total cost of all the wars the United States has ever fought, put together. World War II, for example, cost $4.1 trillion in 2008 dollars, according to the Congressional Research Service.

Even the Moon landings and the New Deal didn’t come close to $23 trillion: the Moon shot in 1969 cost an estimated $237 billion in current dollars, and the entire Depression-era Roosevelt relief program came in at $500 billion, according to Jim Bianco of Bianco Research.

The annual gross domestic product of the United States is just over $14 trillion.

Treasury spokesman Andrew Williams downplayed the total amount could ever reach Barofsky’s number.

“The $23.7 trillion estimate generally includes programs at the hypothetical maximum size envisioned when they were established,” Williams said. “It was never likely that all these programs would be ‘maxed out’ at the same time.”

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