What’s the U.S. Economic Bailout Costing?

At the conservative estimate of $4.6165 trillion, so far (including the Citi bailout) (Bloomberg estimates the bailout even higher, at over $7 trillion already, which is $24,000 for every person in the country), the bailout would cost more in inflation-adjusted costs than:

the Marshall Plan,

the Louisiana Purchase,

the Race to the Moon,

the 1980s S&L Crisis,

the Korean War,

The New Deal,

the Invasion of Iraq,

the Vietnam War,

and NASA [hope that doesn’t include The Race to the Moon …],

which together total $3.92 trillion.

“The only single American event in history that even comes close to matching the cost of the credit crisis is World War II: Original Cost [to U.S.]: $288 billion, Inflation-Adjusted Cost: $3.6 trillion.”

More scary details here, courtesy Barry Ritholtz at The Big Picture

Yes, taxpayers could get some of the money back (the Chrysler 1.5 billion bailout loan in the early 1980s was repaid in full with interest) (maybe), but even if taxpayers are on the hook for only $1-2 trillion, that’s still between $3,200 and $6,500 per every man, woman, and child in the country.

Others suggest we should look at the cost of the bailout in terms of GDP, or in terms of national net worth. (And Nobel-prize-winning economist Paul Krugman, in his recent ‘What To Do’ essay, talks about the viability of solutions in terms of GDP.)

Doing the latter, one commenters says that the $4.6 trillion “is still quite modest. As a percent of total national net worth (government and non-governmental assets minus liabilities) it’s less than 4 percent.” (No idea where those figures come from.)

Another commenter crunches more numbers (with caveats, and sources, listed) to determine government expenditures inflation-adjusted as a percentage of time-relative annual GDPs:

the Marshall Plan (1947): $115.3 billion/$1,574.5 billion GDP in 1947 = 7.3% of 1947’s GDP

the Race to the Moon (1961-69): $237 billion/$3,191.1 billion GDP in 1965 = 7.4% of 1965’s GDP

S&L Crisis (1986-91): $256 billion/$6,742.7 billion GDP in 1988 = 3.8% of 1988’s GDP

Korean War (1950-53): $454 billion/$1,915.0 billion GDP in 1951 = 23.7% of 1951’s GDP

The New Deal (1933-36): $500 billion (Est)/$704.2 billion GDP in 1934 = 71% of 1934’s GDP

Invasion of Iraq (2003-08): $597 billion/$10,989.5 billion GDP in 2005 = 5.4% of 2005’s GDP

Vietnam War (1965-75): $698 billion/$3,771.9 billion GDP in 1970 = 18.5% of 1970’s GDP

NASA (1958-2008): $851.2 billion/$5,423.8 billion GDP in 1983 = 15.7% of 1983’s GDP

which total 153% of annual GDP relative to year of expenditure

In terms of GDP, the current bailouts (2008) — estimated, conservatively, to cost $4,616.5 billion (or $11,523.9 billion GDP in 2007) — would be 40.1% of 2007’s GDP, a little less than the Korean and Vietnam Wars combined, but quite a bit less than the New Deal.

I wish my calculator went up to a billion, much less a trillion ….


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