What is $8.7 Trillion Worth?
By Alan Stewart Carl | Related entries in Congress, EconomyAs everyone knows, Congress and the White House have promised a lot of money over the last few months. Currently, taxpayers are on the hook for $8.7 trillion in loans, guarantees and other payouts. While some of the loans will be repaid, $8.7 trillion is a number that really needs to be put into context:
According to Bianco Research President James Bianco, who crunched these numbers, [the $8.7 trillion] amounts to more government aid and assistance than nine other historic bailouts and big government outlays combined.
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, according to Bianco.
So, basically, we were able to fund all of the 20th century’s major spending plans and fight all the major wars of the last half century for less than half of what we’ve committed to spending on “solving†the current financial crisis. Anyone else think that we might be a bit profligate with the recent expenditures?
I know, I know. The sky is falling and those who don’t jump at the chance to throw taxpayer money at the problem are nothing more than brain-dead devotees of evil free market economics – but I’m just guessing that a few years down the road, we’re going to wish we hadn’t been so quick to throw good money after bad.
Certainly some of the expenditures are appropriate, but the outlays have been so staggeringly large that it’s now almost impossible to separate the wise from the unwise, the necessary from the pork. There’s a difference between controlled, reasonable deficit spending aimed at combating a crisis and the kind of chicken-little response we’ve witnessed in the last several months. I can only hope my fears are unjustified.
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December 16th, 2008 at 3:52 pm
It all depends on whether or not the rest of the world lets us get away with it, doesn’t it?
We’re printing money like it’s going out of style, offering paltry or nonexistent returns on the swelling loans we keep taking, and yet folks keep flooding in to buy more “safe” US gov’t T-bills.
Right now, it seems like other nations are unable to figure out a way to punish us without punishing themselves just as badly. Hopefully for our sake they’ll be stumped. Remember, any currency is worth precisely whatever folks think it’s worth that day. So if folks decide that a dollar is worth the same amount today as it was a month ago even though we’re printing them as fast as we can, who are we to say they are wrong? It sure is stunning though. I worry it can’t last.
every day my guts says it’s going to get way worse, and every day I just hope I’m wrong. Glad not to be an expert, I think.
December 16th, 2008 at 4:42 pm
it sure doesn’t sound right. I think you’ve summed up the gut fears of most Americans, both left and right. Since 911, we americans have seen many “worst case scenarios” come to fruition. it’s as if we keep rolling snake eyes. these fixes have an aweful lot of risk to them, as if we’re propping up another bubble that is sure to burst. I’m scared. (PS – this scenario is exactly what Osama bin Laden had in mind when he baited us into our “war on terror”.)
December 16th, 2008 at 5:51 pm
“Allah hath declared that the great Satan would overextend its financing of mortgage backed securities, and a painful doom would follow the disbelievers throughout the land!“
December 16th, 2008 at 6:02 pm
I’ve seen these numbers crunched before – was it in the WSJ a couple of weeks ago? It made me chuckle, but now, after this latest Fed announcement that interest rates are going down to ZERO, we’ll throw as much money at the problem as it takes, we’ll buy illiquid assets to take them off balance sheets after all, now I’m cringing. And still no word about extending a ‘bridge’ loan to the Auto Industry.
The Fed’s solutions to all of these financial problems are to do more of what got things screwed up in the first place – only do it bigger! The whole thing got started with too low interest rates which made it too easy for large, unregulated investment banks to lend money imprudently creating too much debt against falling assets. So what to do? Lower interest rates to zero and throw large amounts of money into those very same large banks and simply transfer the bad debt to the public (Treasury) balance sheet.
EEK!!! What’s the definition of a fool; One who does the same things over and over again expecting different results? Why not use our capitol and invest in the more prudent local banks to increase their lending capability and reward the good banks while motivating spending in our economy.
What should really drive us mad is when the large, imprudent banks take the public capitol and, instead of lending it to stimulate the economy, they use it to buy up smaller banks and make themselves even larger. Yet our Congress feels the need to take all of their frustration out on the Auto Industry, another victim in the Financial crisis they didn’t cause.
December 16th, 2008 at 6:36 pm
8.7 trillion one-dollar bills would cover an area larger than the state of South Carolina. Laid end to end, they’d stretch 843 million miles. That’s well over four round-trips between the earth and the sun.
December 16th, 2008 at 6:51 pm
Those of us who have been against all of the bailouts from the beginning are a little bemused by this. What exactly did the public investment in all of these banks et al actually buy?
December 16th, 2008 at 7:28 pm
Dhummi – it must be wonderful to have no long term memory, no short term memory either…..it must just be wonderful to have no memory. For the rest of you, it’s a problem we all know has been coming for awhile. We were collectively asleep and let “them” rob us blind while they talked about lifestyle issues, God, taking your guns away, and who “real” americans are….keep your eye on the shiney object. Save yourself….sell any crap assets you can and buy “gold” before it hits $2,000 an ounce. THEY ARE GOING TO PRINT MORE DOLLARS BECAUSE THEY HAVE NO OTHER WAY TO PAY THE BILLS – YOUR DOLLARS WILL BECOME INCREASINGLY WORTHLESS! The day the earth stands still is when OPEC decides they want to be paid in Euros, or Rupees, or god forbid Yuan. We become a third world nation over night.
December 16th, 2008 at 11:40 pm
Bailouts are just too easy. There’s no short term pain, so why not bail everything out? The media is sold, but polls show the public isn’t (yet). Unfortunately, that doesn’t matter because the government knows better than we do.
Ideally, the bailouts should dull the sting of high unemployment in exchange for high inflation “later.” That’s how bailouts are paid for: by diminishing the value of your savings.
But I think once we find out what is really going on with TARP, it will be seen as the biggest looting of the US Treasury in history, meaning we will both see the high unemployment as well as inflation somewhere between the 70′s and Weimar Germany to follow.
December 17th, 2008 at 7:51 am
“…and fight all the major wars of the last half century for less than half of what we’ve committed…”
We’re 0-1-2(?) in those. Just sayin’.
December 17th, 2008 at 8:58 am
[...] Our (recent) debt and promises in perspective. [...]
December 17th, 2008 at 10:20 am
One million seconds = 11-12 days
One billion seconds = 31.7 years
One trillion seconds = 310+ CENTURIES!!!!
December 17th, 2008 at 3:15 pm
With all the debacles of the Bush Administration, Obama and the Democrats should be ashamed of themselves for going along with this obscene scheme.
December 17th, 2008 at 5:16 pm
Congress and the President spent all than money, the bankers live lavish lifestyles on our dime, our tax dollars should not go to pay a dime of it back. This is clearly misrepresentation on the part of government, so let the Congress and the President pay it back!