The cost of the bailouts

“Sitting down?” said Matthew Jaffe in ABC News. Neil Barofsky, the inspector general for the TARP financial bailout, estimates that, taken together, the recent federal bailouts could cost the U.S. as much as $23.7 trillion. “Yes, $23.7 trillion.” He counts more than just the TARP money, tallying all government programs to fight the current recession, largely through helping banks, automakers, and homebuyers.

Let’s put $23.7 trillion in perspective, said Eamon Javers in Politico. True, it covers “worst-case scenarios” in some 50 “economic disaster” programs dating back to 2007, but $23.7 trillion is nearly double the annual U.S. GDP. It’s more than the combined costs of every war the U.S. has fought, more than “the Moon landings and the New Deal,” and way more than we spent on the Great Depression.

The headline number is shocking, said Floyd Norris in The New York Times, but even Barofsky concedes that his $23.7 trillion price tag is “vastly overblown.” It includes cancelled and aborted programs, and assumes that every government-backed mortgage defaults and is worthless, “every bank in America fails,” and the Treasury defaults on its obligations. Still, the “sheer unreality of the number” won't stop lawmakers from taking it seriously.

The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.

Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.

Sign up

The “ridiculously large” $23.7 trillion figure is getting all the attention, said Michael McAuliff in the New York Daily News, but Barofsky’s larger point is that the Treasury isn’t spending our money with enough transparency and oversight. The huge amounts of real money at stake make cheating an “irresistible temptation,” and Barofsky already has 35 TARP-related civil and criminal investigations underway.