Bailouts are bankrupting our country

Here’s a rundown of the recent government actions to help the economy, which have not worked and are driving our nation deeper and deeper into debt. Even a conservative estimate of these actions shows that at least $1.4 trillion in new debt has been imposed on American taxpayers.

We’ve also dug quotes from Treasury Secretary Paulson where he predicts these actions will help the economy and protect taxpayers. His predictions have been wildly off the mark and have rightly destroyed his credibility.

The Stimulus Plan
Cost: $152 billion in direct spending

“I talked with knowledgeable people in all parts of the economy and reviewed the data with our economic team…. the potential cost of not acting has become too high. We must act now to support our economy this year. The president laid out today clear principles that should guide the creation of an effective growth package. We are focused on working with Congress to quickly reach consensus on a plan that gets cash to consumers and gives businesses incentives to invest, to grow and to hire. We know from experience that these policies work to stimulate growth in the short term. The package should be robust enough to make an impact this year and should be temporary, so that it doesn’t significantly impact our long-term fiscal position.” – Secretary Paulson, January 18, 2008

Bear Stearns
Cost: $29 billion in Federal Reserve non-recourse loans

“For some months now, reduced access to short term funding and liquidity issues have created turmoil in our capital markets. In the midst of these conditions, Bear Stearns found itself facing bankruptcy. The Federal Reserve acted promptly to resolve the Bear Stearns situation and avoid a disorderly wind-down. It is the job of regulators to come together to address times such as this; and we did so. Our focus was the stability and orderliness of our financial markets.” – Secretary Paulson, March 26, 2008

Housing Bill (H.R. 3221)
Cost: $42.5 billion in direct spending

“I commend the Senate for moving swiftly to pass important GSE legislation that will provide temporary authorities to give confidence to markets and will create a strong, independent regulator better able to address the risks these enterprises pose. [I]t is of the utmost importance to our market and economic stability that the GSE portions of this bill become law. These components are orders of magnitude more important to turning the corner on the housing correction.” – Secretary Hank Paulson, July 26, 2008

Fannie and Freddie Takeover
Cost: $200 billion in stock warrants

“I strongly endorse both the decision by FHFA Director Lockhart to place Fannie Mae and Freddie Mac into conservatorship and the actions taken by Treasury Secretary Paulson to ensure the financial soundness of those two companies. These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets. I also welcome the introduction of the Treasury’s new purchase facility for mortgage-backed securities, which will provide critical support for mortgage markets in this period of unusual credit-market uncertainty.” – Federal Reserve Board Chairman Ben S. Bernanke, September 7, 2008

“Based on what we have learned about these institutions… I concluded that it would not have been in the best interest of the taxpayers for Treasury to simply make an equity investment in these enterprises…. And let me make clear what today’s actions mean for Americans and their families. Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets…. This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement. A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation.” — Secretary Hank Paulson, September 7, 2008

Lehman Brothers
Cost: $87 billion in advances backed by the Federal Reserve
Other Costs: $70 billion (from Federal Reserve & FRBNY)

“I strongly support the actions announced tonight by SEC Chairman Chris Cox, Federal Reserve Chairman Ben Bernanke and market participants. These changes will strengthen and enhance our financial markets. These initiatives will be critical to facilitating liquid, smooth functioning markets, and addressing potential concerns in the credit markets.” The SEC action included requiring segregation of customer securities and case from those of Lehman. – Secretary Hank Paulson, September 14, 2008

AIG Bailout
Cost: $85 billion in loans

“We are working closely with the Federal Reserve, the SEC and other regulators to enhance the stability and orderliness of our financial markets and minimize the disruption to our economy. I support the steps taken by the Federal Reserve tonight to assist AIG in continuing to meet its obligations, mitigate broader disruptions and at the same time protect the taxpayers.” – Secretary Hank Paulson, September 16, 2008

Money Market Mutual Fund Backings
Cost: $50 billion in pledged assets

“The U.S. Treasury Department today announced the establishment of a temporary guaranty program for the U.S. money market mutual fund industry. For the next year, the U.S. Treasury will insure the holdings of any publicly offered eligible money market mutual fund - both retail and institutional - that pays a fee to participate in the program. President George W. Bush approved the use of existing authorities by Secretary Henry M. Paulson, Jr. to make available as necessary the assets of the Exchange Stabilization Fund for up to $50 billion to guarantee the payment in the circumstances described below.” – Treasury Department Press Release, September 19, 2008

Latest Plan: Socializing Bad Loans
Cost: $700 billion for the latest proposal

“The federal government must implement a program to remove these illiquid assets that are weighing down our financial institutions and threatening our economy. This troubled asset relief program must be properly designed and sufficiently large to have maximum impact…. I am convinced that this bold approach will cost American families far less than the alternative - a continuing series of financial institution failures and frozen credit markets unable to fund economic expansion. I believe many Members of Congress share my conviction. I will spend the weekend working with members of Congress of both parties to examine approaches to alleviate the pressure of these bad loans on our system, so credit can flow once again to American consumers and companies. Our economic health requires that we work together for prompt, bipartisan action.” – Secretary Hank Paulson, September 19, 2008

Total Paulson Bill to Date: $715.5 billion
New Requested Authority: $700 billion
Total Since January 2008: $1.416 TRILLION