Bailout Tally So Far: Twice the Entire U.S. Budget

A new tally shows the government has committed more to rescuing the economy than most people realize

By SHARE

Don’t say your government isn’t generous.

It may have gotten hard to follow bankers-aid programs like the term auction facility (TAF) and the primary dealer credit facility (PDCF), but rest assured, your represenatives in Washington are spending a a tidy sum – a gargantuan fortune, actually – to keep the arcane financial system humming. The nonprofit Milken Institute in Los Angeles has added up all of the money the government has spent or pledged to help the ailing economy so far, and come up with a tally of $7,500,000,000,000.

If your eyes can’t follow all those zeroes, the shorthand is $7.5 trillion. It seems more manageable that way, when you truncate the zeroes and just have one decimal point, followed by a concise, two-syllable word that’s kind of fun to say. The sum doesn’t include the auto-industry bailout, but even if it did, the extra $15 billion for GM and Chrysler wouldn’t even budge the decimal point.

[See the 7 Worst Ways to Rescue Detroit.]

But don’t be fooled: $7.5 trillion is actually quite a lot of money. Not long ago, many people used to argue that a mere $ 0.6 trillion a year - $600 billion – was way too much to spend on tanks, fighter jets, and the military budget. The bailout funds are about 12 times as much. They’re also more than twice the entire annual spending of the federal government, which should come in just over $3,000,000,000,000 in 2009. Er, sorry – that’s $3 trillion.

The good news, if there is any, is that the government isn’t just spending all that money, without asking for a receipt. Most of the $7.5 trillion is in the form of loans or loan guarantees, and most of that is administered by the Federal Reserve, through ordinary – and extraordinary – lending to commercial banks and other companies. In some cases the Fed has pledged an amount of money that hasn’t been fully tapped, and may never be. Theoretically, most or all of the money should be paid back, with interest. Unless the companies default. Not like there’s any risk of that happening.

[See why some get a bailout, others get bluster.]

The Milken Institute breaks out the funding by program, in a feature due to be published in the January edition of its monthly Review. Here’s a general breakdown of the maximum amounts funded, by agency:

Federal Reserve: 12 programs, up to $4.8 trillion (including Bear Stearns and AIG)

Spending bills passed by Congress: 10 programs, about $1.7 trillion (including the 2008 fiscal stimulus package, the $700 billion financial rescue package, and the $300 billion HOPE for Homeowners Act)

FDIC: 2 programs, upwards of $1.5 trillion

Treasury Dept., in concert with other agencies: $250 billion

Still to come? President-elect Barack Obama’s own stimulus plan, which could reach $500 billion or more. But hey, that’s pocket change.