What is it Really Going to Cost?

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Mark Zandi of Moody's Economy.com has crudely estimated that the ultimate cost of Paulson's plan and all the other rescues (of the mortgage giants Fannie Mae and Freddie Mac, the investment bank Bear Stearns, and the insurer AIG) won't exceed $250 billion. That's a lot, but consider that the annual federal budget runs at about $3 trillion. Compounding the confusion is this: For budget purposes, the Paulson rescue would probably be "scored" under the Federal Credit Reform Act. This law sets budget spending at the proposal's ultimate cost -- not the annual cash flows. For now, the Congressional Budget Office says there are so many unknowns that it can't make an estimate.

But the biggest unknown lies elsewhere. What happens if Congress doesn't approve the plan, or something like it? Zandi, a supporter, argues that the economy will get much weaker, that many more banks and financial institutions will fail, and that the rise of joblessness will be greater, as will the fall in tax revenue and the increase in unemployment insurance and other government payments. Is this scare talk or a realistic threat? The true cost of Paulson's plan hangs on the answer, and if the danger is real and imminent, then the cost of doing nothing would be far greater.

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Posted By: charlesrzeller@yahoo.com @ 03/19/2009 12:09:33 PM

Samuelson must be an idiot. The ultimate cost may be as much as 60 Trillion Dollars. And this is just the credit default swaps.
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Posted By: demarvin @ 02/03/2009 1:36:00 AM

The total cost of this so called bailout during the next four years of the Democratic Administration will be in the vicinity of 5-6 TRILLION DOLLARS! How did I arrive at this number? Governments projects of this type usually have a final cost of about 3 times the initial estimate and that is a low multiple. The Boston "Big Dig" was proposed to cost 3 Billion and came in at about 15 Billion. Once moneys of this magnitude is legislated the political animals enter the scene and since there is no such thing as "oversight" no one cares where the money goes since at that time it is considered "free" money.Only a financial collapse of our entire economy will change the attitude of our elected leaders.At this time the Democrats are in a pay back mode to those that got them elected,eventually there must be a plan 2 where working people and unemployed people will see some progress in their status. The usual policy of LIE,TAX,SPEND and Elect is working.
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Posted By: parmenides @ 01/23/2009 9:12:20 AM

Presidents are sworn in to office on an oath to protect and uphold the constitution, not to control the economy. Are these bailouts in the executive power in the constitution? I think not. Are we allowing the executive powers to expand? Maybe this is OK if you trust the current president, but what happens when you don't trust the next president and we can't take back the new power, and the new and bigger government organizations? We need to remember that the founding fathers wanted separation of powers and checks and balances for a reason. We can't trust the government to protect us from economic crisis. It is not constitutional.