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The Real Cost of the Bailout and Stimulus
by Kevin Zeese
That is what Bloomberg reports as of February 9, 2009 has been committed on behalf of the American taxpayer to bail out America's finance system and stimulate the economy.
Only a small percentage of this money - $1.68 trillion - has been voted on by Congress. Congress has voted on the Bush era tax cuts of $168 billion, the Obama era stimulus of $800 billion, and the $700 billion TARP (Troubled Asset Relief Program) legislation to bail out the financial sector.
The vast majority of the spending, $8.1 trillion, has been off the Congressional books and made by the Federal Reserve and FDIC. The Federal Reserve (which is a non-government, private institution made up of US banks) and Federal Deposit Insurance Corporation have lent or spent over $2 trillion over the past two years and pledged up to $5.7 trillion more to cover bad investments made by the financial system. The commitments are composed of about $1 trillion in stimulus packages, around $3 trillion in lending and spending and $5.7 trillion in agreements to provide aid.
- The amount is equal to almost two-thirds of the value of everything produced in the US during 2008.
- It is enough to pay off 90% of the mortgages in the United States - $10.5 trillion would pay for all mortgages, according to the Federal Reserve.
- It is $30,000 for every man, woman and child in America; that is, $120,000 for a family of four.
- It would be enough to send a $1,430 check to every man, woman and child alive in the world.
- It's 13 times what the US has spent so far on wars in Iraq and Afghanistan.
We do not even know where all of those funds have gone. The taxpayer is putting up a king's ransom and not being told who is receiving it. We guarantee the debts of banks and are not being told what collateral is provided or who is receiving the funds. Before receiving the bailout funds, Treasury Secretary Paulsen promised transparency. But Federal Reserve Chairman Bernanke says that such transparency would be "counterproductive."
You'd think for $9.7 trillion we'd get health care for all, tax relief or free college education!
All of this money and yet foreclosures, bankruptcy and unemployment are all up; the stock market, consumer spending and housing prices are down.
Pouring tax dollars into banks is not working. It is too early to tell whether the economic stimulus will get the economy moving.
We don't know where the bottom is yet, see no evidence that the bailout is working, and already, as Barry Ritholtz, author of Bailout Nation, points out, the bailout has cost more than the Marshall Plan, Louisiana Purchase, moonshot, S&L bailout, Korean War, New Deal, Iraq war, Vietnam war, and NASA's lifetime budget - combined! In fact, the bailout and stimulus are more than double:
- Marshall Plan: Cost: $12.7 billion, Inflation Adjusted Cost: $115.3 billion
- Louisiana Purchase: Cost: $15 million, Inflation Adjusted Cost: $217 billion
- Race to the Moon: Cost: $36.4 billion, Inflation Adjusted Cost: $237 billion
- S&L Crisis: Cost: $153 billion, Inflation Adjusted Cost: $256 billion
- Korean War: Cost: $54 billion, Inflation Adjusted Cost: $454 billion
- The New Deal: Cost: $32 billion (Est.), Inflation Adjusted Cost: $500 billion (Est.)
- Invasion of Iraq: Cost: $551 billion, Inflation Adjusted Cost: $597 billion
- Vietnam War: Cost: $111 billion, Inflation Adjusted Cost: $698 billion
- NASA: Cost: $416.7 billion, Inflation Adjusted Cost: $851.2 billion total: $3.92 trillion
You'd think for $9.7 trillion we'd get health care for all, tax relief or free college education! But Americans got none of that. Is this a wise use of tax dollars? Are there better ways to use this money? Will this trickle down approach work this time, even though it has failed in the past?
We're doing two things: First we are working to break the bailout. Join us at BreakTheBailout.com and pledge to help Break the Bailout. We seek to take back our economy and transform it into an economy that puts the people's interests first.
Second, we will be putting forward a Prosperity Agenda - a vision of what kind of economy America should have and then we will be advocating for it. We would like your thoughts on what you want out of the economy.
We are at a crossroads where a new energy economy is going to be developed.
How should it be different than the current economy? Give me your thoughts at KZeese@earthlink.net.
Acting alone, we can achieve nothing; acting together, we can change everything. We need to act together because change is urgently needed.
Kevin Zeese is the executive director of the Campaign for Fresh Air & Clean Politics (http://www.FreshAirCleanPolitics.net), whose projects include Prosperity Agenda, Voters for Peace, True Vote, Break the Bailout and Climate Security.
[26 sep 09]