Cost of the bailout

Posted in Politics at 9:47 pm by ducky

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.

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