the LYNCH report

The Power of Clear Insight

Bailout Cost to Average Taxpayer (Revisited)…

with 6 comments


Following on from our article on the real source of the “credit crisis”, we’ve had a ton of requests for the methodology behind our assertion that the average cost to taxpayers of the “bailout” is $5,354. That figure used 2003 IRS data; we’ve since gotten our hands on 2005 data (the IRS isn’t exactly known for their efficiency…), so here it is: a calculation of the impact of the possible range of costs associated with the “bailout”:

Estimated costs of bailout:

Bear Stearns: $29,000,000,000.

Freddie and Fannie: $200,000,000,000.

AIG: $85,000,000,000.

Federal Bailout Package: $700,000,000,000.

Total: $1,014,000,000,000.

Number of Personal Income Taxes Filed (2005):

134,362,678 ¹ ²

Obligation per Taxpayer:

$1,014,000,000,000. / 134,362,678 = $7,546.74

So, there you have it: $7,546.74 for each and every taxpayer, on average, spent by the government to buy assets at prices no one is willing to freely buy them at.

Each individual taxpayer could alternately spend that $7,546.74 on:

  • One year of tuition, on average, at a public four-year college or university ($6,185).
  • 2001 Dodge Ram 2500 Pickup Truck ($7,600).
  • 3.03 carat diamond engagement ring ($7,395).
  • Feeding his or her family for one year ($5,781).
  • Providing essential food and shelter for 18 children in a third world country for one year ($7,560). (If everyone picked this option, there would be no starving children in the world – it’s enough money to provide food and shelter for 2.418 billion children for one year).
  • 1,886 gallons of gas (at $4/gallon).
  • Two first-class vacations for a family of four.

By comparison, the $1,014,000,000,000. being considered on the bailout is more than the US government spends annually on:

  • Social Security: $586.1 billion
  • Defense: $548.8 billion
  • Medicare: $394.5 billion
  • Unemployment and Welfare: $294.0 billion
  • Medicaid and Other Healthcare: $276.4 billion
  • Interest on Debt: $243.7 billion (watch for this one to balloon…)
  • Education and Training: $89.9 billion
  • Transportation: $76.9 billion
  • Veterans’ Benefits: $72.6 billion
  • Justice: $43.5 billion
  • Natural Resources and Environment: $33.1 billion
  • Foreign Affairs: $32.5 billion
  • Agriculture: $27.0 billion
  • Community and Regional Development: $26.8 billion
  • Science and Technology: $25.0 billion
  • Energy: $23.5 billion
  • General Government: $20.1 billion

Click here for 2007 US Government Spending data.

Keep in mind there is no such thing as “government money” – the government has no money, except as it appropriates from the populace by way of taxation. That appropriation can take the form of direct taxation or issuing Treasure Bills and thereby deferring the taxation.

6 Responses

Subscribe to comments with RSS.

  1. […] a week of shocking developments, including a defeated bill which sought new government spending in excess of the defense budget (and, in fact, any single item of the general budget), Senator John McCain blew a golden […]

  2. […] (so far totalling around $1,014,000,000,000, or about $7,546 per taxpayer, as we wrote in a previous article), the world’s markets continue to […]

  3. Business taxes need to be factored into the equation, but on the other hand, state and local governments are forking up money. There will be less federal aid to state and local governments causing tax payers in those areas to put up more tax money. This whole thing is causing such a crises in California and New York, that those tax payer will be very burdoned. Overall a rippling effect is going to be felt right down to the local level of tax payer tax increases.

    DrDave

    October 10, 2008 at 6:00 am

  4. […] at a time when there isn’t much money to go around and the government has already put taxpayers in the hole for an additional $7,546 each by way of the “bailout” of the financial sector. Additionally, capital is more likely […]

  5. […] has been used as justification for everything from the “bailout” packages (at a cost of $7,546 per taxpayer, and counting…) to the nationalization of insurance companies and, coming soon, automobile […]

  6. […] down payment come 2011 (could have solved a lot of inner city housing issues with that plan). Bailout Cost to Average Taxpayer (Revisited)… the LYNCH report […]


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: