Budget Office Estimates Bailout Costs to Exceed $64 Billion
In a report today, the Congressional Budget Office tried to put a price tag on the bailout (PDF) through the end of last year. The answer: $64 billion.
That’s what the office projects the “subsidy cost” of the Treasury Department’s actions through Dec. 31 to be. As of Dec. 31, the Treasury Department had invested or lent $247 billion. The subsidy cost, according to the report, is “the difference between what the Treasury paid for the investments or lent to the firms and the market value of those transactions.”
Of course, since then, the Treasury has continued to dole out billions, so this report doesn’t account for most of the loans to the auto companies or the billions more invested in Bank of America.
The report doesn’t break down the cost to the government of every investment in every firm but does give an idea of where the major liabilities lie. The Capital Purchase Program, the Treasury Department’s program to invest in “healthy” banks, has an estimated subsidy of $32 billion dollars; that’s 18 percent of the $178 billion invested as of Dec. 31. AIG’s estimated subsidy is $21 billion, 53 percent of $40 billion invested.
The bailout bill mandated that the CBO perform an estimate like this twice yearly, so the next report will give a more complete idea of how far the government is really in the hole.
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5 comments
Philip Cardella
Jan. 16, 2009, 7:04 p.m.
Ok, so I’m dumber than I thought. Could someone please explain what the subsidy cost is, beyond “the difference between what the Treasury paid…and the market value of those transactions”? What causes this difference? Did we overpay for an obvious reason? Did we pay $40B to AIG and then their value dropped causing the 53% disparity? I just don’t quite get it. Then again, I don’t understand how any bank could be allowed to run a 30 to 1 debt to income ratio when I get lectured for my 2 to 1 ratio.
wild watcher
Jan. 17, 2009, 5:07 a.m.
awwwwww Philip you might be dumber than a box of rocks, but I doubt that! It is very clear from the report, that they (your gov.) have recorded certain $247b WAS spent up to the time 12/31/08. And they (your gov.) are showing us (the citizens) just what they can do with that number $247b. Sharpen up at this point Philip…$247b is now changed to $64b. [$247b IS NOW $64b] This change in the big number should not be a surprize Philip!, it is actually necessary they (your gov.) make it a little number for us (the citizens) to easily accept. You see Philip $64b is actually more accurate than $247b, just ask anybody. Now don’t even let it bother you Philip, when they (the gov.) says they borrowed the nut. They been borrowing for so long now…it is considered normal, and appropriate. And we (the citizens) are to promptly turn a blind eye when they borrow, and keep it turned while the adjustors (the adjustors) make the nut more accurate. So get it real good Philip, because we(the citizens)are going to only use the adjustor’s accuratized number $64b from now on.
wild;)
MC Shalom
Jan. 17, 2009, 6:32 a.m.
Chairman Ben S. Bernanke, We Are Opting Out of Credit.
All of Our Economic Problems Find They Root in the Existence of Credit.
Out of the $5,000,000,000,000 given out to the banks, that is $1,000 for every inhabitant of this planet, what is it exactly that WE, The People, got?
A Credit Free, Free Market Economy Is Possible.
Both Dynamic on the Short Run & Stable on the Long Run.
I Propose, Hence, to Lead for You an Exit Out of Credit:
Let me outline for you my proposed strategy:
✔ Preserve Your Belongings.
✔ The Property Title: Opt Out of Credit.
✔ The Credit Free Money: The Dinar-Shekel AKA The DaSh, Symbol: - .
✔ Asset Transfer: The Right Grant Operation.
✔ A Specific Application of Employment Interest and Money.
[A Tract Intended For my Fellows Economists].
If Risk Free Interest Rates Are at 0.00% Doesn’t That Mean That Credit is Worthless?
Since credit based currencies are managed by setting interest rates, on which all control has been lost, are they managed anymore?
We Need, Hence, Cancel All Interest Bearing Debt and Abolish Interest Bearing Credit.
In This Age of Turbulence The People Wants an Exit Out of Credit: An Adventure in a New World Economic Order.
The other option would be to wait till most of the productive assets of the economy get physically destroyed either by war or by rust.
It will be either awfully deadly or dramatically long.
A price none of us can afford to pay.
“The current crisis can be overcome only by developing a sense of common purpose. The alternative to a new international order is chaos.”
- Henry A. Kissinger
Let me provide you with a link to my press release for my open letter to you:
Chairman Ben S. Bernanke, Quantitative [Ooops! I Meant Credit] Easing Can’t Work!
I am, Mr Chairman, Yours Sincerely,
Shalom P. Hamou AKA ‘MC Shalom’
Chief Economist - Master Conductor
1 7 7 6 - Annuit Cœptis
Tel: +972 54 441-7640
wild watcher
Jan. 17, 2009, 2:47 p.m.
Thanks for the reference links MC Shalom, your work “1776 - Annuit Coeptis” I think a refreshing answer to the madness.
wild;)
MC Shalom
Jan. 18, 2009, 2:17 a.m.
I hope to see that the counter of the registered shares will go up soon so this won’t stay a dream and these economic sufferings will come to an end:
✔ The Property Title: Opt Out of Credit.
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