Tuesday, May 11, 2010

Defending the Bailout: The Real Numbers

I've created a new rule for discussing the financial bailouts:
Anyone who still says the bailout cost $700 billion doesn't get to have an opinion until they catch-up on current events.
And this is just maddening, as the people who still hate the bailout act as if they're the highest experts on the subject, simply because everything seemed so obvious to them.  The bad guys got us into this, so the bad guys don't deserve to get bailed out.  And to help that along, they insist on painting the whole thing in the worst light, as if we all got hornswaggled by Wall Street by a fake scare, and the phrase "$700 billion" is all the evidence needed to know we got screwed.

But of course, $700 billion was the amount authorized.  But it's not like they just wrote one of those giant sweepstakes-style checks for that amount and handed it to Mr. Moneybags.  Because this wasn't the free-for-all these "experts" led themselves to believe.  There were strings attached to that money.  And it wasn't an automatic payout on the funds.

The Real Numbers

And finally, I found a site that actually kept track of the money.  And lo and behold, the amount spent wasn't $700 billion.  In fact, if you include the Wall Street bailout, Fannie and Freddie, the Auto bailout, AIG, Toxic Assets purchased, and foreclosure relief; we spent a combined total of $536.3 billion

And yes, that's a lot of money.  But that's considerably less than $700 billion, and while many bailout-haters imagined that these other bailouts were on top of the $700 billion, they weren't.  In fact, the Wall Street bailout was only $244.9 billion.  And again, that's a lot of money, but it's not $700 billion.

And of course, a lot of the money has already been paid back.  As of today, $186.9 billion has been repaid, which is almost half of the TARP funds borrowed, while we've received revenues of $29.9 billion on the assets we got.  Because again, this wasn't a free-for-all.  There were strings on that money.

Haters Don't Need Numbers

And even now, we're still holding a lot of assets, waiting for the right time to sell them for a profit.  Like our shares of Citigroup and GM that we still have.  Yet the "experts" who hate the bailout imagine that none of this is happening.  To them, we wrote that giant check to Wall Street and they laughed all the way to work.

And yes, these bastards royally screwed up and in a more fair world, they would have suffered.  But...the world's not fair and the powerful still know how to stay that way.  But all the same, things aren't nearly as bad as the bailout haters want to believe.  These were borrowed funds.  We got equity in companies.  We bailed them out, but we didn't get buried. 

Oh, and to put this in perspective: Last year's Stimulus Bill was for $787 billion, of which, an estimated $237 billion went to individuals as tax cuts; including a child tax credit, payroll tax credit, college tuition credit, and many other items that went directly to the poor and middle class.  And no, we didn't get quite as much as Wall Street got, but it wasn't shabby.  Now, if we can just get our financial reform passed, we should be able to get back to business.


mahakal said...

The real poor do not benefit from tax cuts. Tax cuts only benefit those who pay more in taxes than they take in deductions, unless you would like to propose a negative income tax.

Doctor Biobrain said...

Uhm, dude? We HAVE a negative income tax for poor people. That's what refundable tax credits are all about. Poor people can get back thousands more than they paid in. Not only have we been doing that for over a decade with the Earned Income Credit, but the Stimulus Bill created even MORE refundable tax credits, including an expansion of the Child Tax Credit and the Earned Income Credit.

This is something conservatives HATE as they insist that these are "handouts" and not "tax cuts." And so when Obama says he gave "tax cuts" to these people, they insist that he's lying, because they don't consider these to be tax cuts.

Plus, the biggest chunk of the tax cuts was for the Payroll Tax Credit, which all working poor people got. That cost $116 billion and gave people $400 each.

Oh, and another of the tax cuts poor people got with the Stimulus was a cut in taxes on unemployment benefits, as that's normally considered taxable income. So poor people benefitted from that tax cut too.

mahakal said...

Negative income tax is not the same as refundable tax credits.

Doctor Biobrain said...

What's the difference?

And the main point remains: Obama's stimulus tax cuts helped the poor, by giving them more money.

mahakal said...

Explain how someone on disability, for instance, benefits from a tax cut.

Doctor Biobrain said...

So you're suggesting that people who don't work should ALSO get a refund on their tax return? Why? What purpose would that serve, when we could just increase the other benefits they receive?

Especially as disability and welfare pay year-round, while I'm guessing a "negative income tax" would only come to them after they filed a tax return that they currently don't need to file. That doesn't sound like the best way of giving them extra money. It sounds like an extra hassle, to me.

And as a reminder, the stimulus gave $250 to folks on Social Security and Disability. It also included more money for food stamps and food banks, as well as other programs to help non-working people. And while these weren't called "tax cuts" I again fail to understand why that's necessary.

And of course, they're also eligible for the $8000 homebuyer credit, which is fully refundable; making it a tax cut. They can also get the college tuition credit and the home energy credit; though I'm not sure if those are refundable.

So yeah, the stimulus last year gave money to even the poorest people; including free money and a tax cut, if they were eligible.

mahakal said...

The point isn't how it is implemented, but the negative income tax is something like a guaranteed minimum income. Homebuyer credits are very nice and all but many people cannot afford their rent and food in this economy, much less to buy property. If there was an extra $250 thrown to the poor, that was helpful, I guess, but doesn't do much to fix the structural poverty in this country.

Doctor Biobrain said...

And again, let's remember we're talking about people who don't work, and not the working poor. The working poor got quite a lot last year from the stimulus; especially if they have kids.

And secondly, we DO have a guaranteed minimum income and we DO have programs to help even the poorest. Programs that are much more helpful than a negative income tax, because they pay people on a monthly basis, rather than an annual basis. Even the Earned Income Credit can be included in people's paychecks, if they ask their employer to do so.

If you're suggesting that we INCREASE the amount we give people, I can support that. But to pretend as if we've got a flawed system until we institute something with the specific name "Negative Income Tax" is absurd. We have a negative income tax for the working poor, and benefit programs for the non-working.

BTW, are you talking about a system that would provide a minimum income to able-bodied people who choose not to work? I wouldn't support that at all.

Beyond that, the answer to structural poverty has nothing to do with giving people more money or benefits. Those are short-term fixes; not long-term solutions.