How Big are Those Bailouts?

Remember the bailouts? Right—the US Government has put something like $1.5 trillion dollars or more directly into the US economy to keep things floating. First there was TARP, at $700 billion, and then the “stimulus,” at another $700 billion. None of this includes the amount spent in putting a couple of car companies together, bailouts to the States, and just general increases in spending in the budgetary process, including massive new spending on universal health care (that won’t be universal), and the new “green initiatives,” such as “cap and trade.” Then we have all these odd secret agreements between various banks and the current Administration, including CitiGroup.

But the Inspector General of the $700 billion dollar TARP bailout program says things are much worse than we think.

Neil Barofsky, the special inspector general over the Troubled Asset Relief Program (TARP), will tell lawmakers on Tuesday that taxpayers are being left in the dark about what banks are doing with bailout money, don’t know the value of the government’s investments and will not know the full extent of how the money is invested.

Barofsky said that while the TARP program that Congress passed amounts to $700 billion, the total federal government support since 2007 for the economy and the financial sector could reach a far higher figure of $23.7 trillion. The government has committed significantly more money through a variety of other federal agencies and programs.

Yes, you read that right. The US Federal Government has “supported” the financial sector with $23 trillion dollars since 2007. That’s twice the yearly output of the entire US economy. Twice the GDP.

It’s incredible to think injecting this much money into the economy wouldn’t generate a bounce. Of course, it’s also hard to see how the downside of this sugar high isn’t going to be worse than the problem the sugar was designed to solve.

Related posts:

1. If Bailouts Worked….
2. Adding Up the Math
3. Why Doesn’t This Surprise Me?