Getting More Than You Paid For

The Department of Treasury announced that at the end of March TARP only cost taxpayers $89 billion.  That's about $115 billion less than Treasury had previously estimated TARP would cost the taxpayers.    

At first glance, this could look like a positive step forward.  But, not so fast, let's talk about other costly government spending related to TARP that the $89 billion fails to include.

Remember Fannie Mae and Freddie Mac? They really should also be included when we talk about financial bailouts on taxpayers' backs (Technically Fannie and Freddie were not in included in the TARP bill.  However, that doesn't mean the same people, American taxpayers, are not the ones who are also paying for that bailout). Trouble is that Treasury's recent report didn't mention the $400 billion in taxpayers money spent on these two GSEs. And wait there's more, a lot more, to factor in when we talk about all the money spent on bailouts and the struggling economy since the fall of 2008.

Mark Zandi, chief economist of Moody's, made this exact point in a recent interview. He argued that in order to really get a good idea of all the taxpayer money spent relating to bailouts and the economy we would need to add the cost of the Fannie and Freddie bailout, plus the auto bailout, plus the $787 billion stimulus package, plus automatic government payouts (i.e. unemployment insurance), plus TARP. Once we add together all these figures, then and only then, do we really get a full picture of how much the government spent on the recent financial crisis.  

As Zandi stated in the interview, "You take all of that together, and you come up with a number that's pretty close to $2 trillion, and I think that is more representative of what the costs are to taxpayers from this."

Unfortunately, you won't see the Treasury Department talking about this $2 trillion. Rather Treasury (and most of the media) will make a big deal that some of the banks are paying back TARP costs. And technically banks alone may only owe taxpayers $89 billion, but that figure is far from representative of all of the dollars spent on items relating to the bailouts.  Just a reminder, it was about $2 TRILLION!