How much are the various bailouts going to cost? Politico has some staggering totals.
- More than $1.5 trillion in Federal Deposit Insurance Corp. loan guarantees, including a $139 billion assist to the lending arm of General Electric Corp.
- $1.8 trillion in cash, tax breaks and loan guarantees doled out from the Treasury Department to taxpayers, financial institutions and credit companies.
- $300 billion for homeowners from the Federal Housing Authority.
- $25 billion in assistance for auto companies from a program overseen by the Energy Department, which is separate from the bailout proposal that tanked last week in the Senate.
- And $5 trillion worth of new money, loan guarantees and loosened lending requirements from the Federal Reserve Bank.
That is $8 trillion dollars worth of bailing.
Now let’s put it in perspective.
The New Deal, for instance, cost an estimated $32 billion in its day, which would be about $500 billion in today’s dollars. The Marshall Plan cost about $12.7 billion, which is the equivalent of a paltry $115.3 billion. The Louisiana Purchase? The French got $15 million, which would be worth about $217 billion today.
If you take those three items, add in the adjusted costs of the Race to the Moon, the savings and loan crisis, the Korean War, the Iraq war, the Vietnam War and assistance for NASA, you still get to just $3.92 trillion – not even half of the taxpayers’ exposure today.
This is supposed to keep something as bad as or worse than the Great Depression happening. Maybe it will; maybe it won’t.
We are supposed to get some of this money back when the economy improves. Some of those guarantees may not require anything more than good faith too. Yet the Obama team has not even come on the field to play, so who knows how high this thing is going to go?
I’m not an economist, but it sounds like we need a new paradigm for capitalism. This isn’t your father’s or grandfather’s free market anymore, and, surely, not Adam Smith’s.