11.26.08
Cost of the bailout
There has been discussion about how the current financial system bailout is the most expensive government program ever, according to numbers from Jim Bianco (as I saw it reported by Barry Ritholtz).
Bianco’s numbers are adjusted for inflation, which is good, but that isn’t a complete picture. There are an awful lot more Americans now than there used to be. If you look at the bailout in terms of per capita cost or as a percentage of GNP, you’ll see that there were a few other programs that were comparably expensive. So yeah, it’s bad. Yeah, it’s a big deal. But we have seen worse.
| Program | Inflation-adjusted cost (billions) | Cost per capita (thousands) | % of GNP |
|---|---|---|---|
| Marshall Plan | 115.3 | 0.78 | 4.7% |
| Savings and Loan crisis | 256 | 0.95 | 1.7% |
| Moon shot | 237 | 1.2 | 4.3% |
| Iraq war | 587 | 2.0 | 4.4% |
| Korean war | 454 | 2.9 | 15.0% |
| Vietnam war | 698 | 3.4 | 11.2% |
| New Deal | 500 | 4.0 | 55.1% |
| Current bailout | 4616 | 15.3 | 33.2% |
| World War II | 3600 | 26.3 | 150% |
| Louisiana Purchase | 217 | 40.9 | NA |
Notes: It was surprisingly hard to find historical GNP figures. It only started being recorded in 1947, and the sources aren’t always clear if the figures are inflation-adjusted or not. Also, most of these things spanned several years; I picked a year near the middle for the calculations. Bottom line: take the % of GNP numbers with a grain of salt. They are close, but not exact.
I used the Flow of Funds Accounts of the United States for 1947-2007, and the a very poorly annotated list from Duke for the New Deal and WW2 numbers. Sorry, there are no GNP numbers from 1803.
