The Bailout Tab Is Rising for Taxpayersby Tim Manni
Critics of large government spending have long argued that the increased dollar count accumulates mainly into a burdensome future financial obligation. According to estimates from the Congressional Budget Office (CBO), we’re about to get the first taste of our mounting obligation.
The CBO estimates that taxpayers will have to pay $167 billion more than expected for the nation’s laundry list of bailouts. The tab will increase $152 billion for this year and $15 billion for 2010:
The CBO raised its projection because yields have increased on securities issued by the bailed-out financial institutions under the $700 billion .
That means there will be an increase in the cost of the subsidy from the U.S. Treasury’s purchase of preferred stock, asset guarantees and loans to automakers, the CBO said.
That taxpayers’ tally could rise even more thanks to new bailouts announced after the CBO’s original cost estimate. Bailouts announced for Bank of America (BofA), AIG, and Fannie and Freddie are expected to do so:
[The BofA and AIG] deals will be at rates higher than the averages in the CBO’s original estimate. Also going up: the subsidy rates in the administration’s $50 billion program to deal with home foreclosures.
Theisn’t the only one that will prove more costly to taxpayers than originally thought, says the CBO.
Bailing out Fannie Mae and Freddie Mac — the two mortgage finance giants taken over by the government in September — will cost another $52 billion this year alone, and an additional $28 billion for their activities from 2010 to 2019, says the CBO.
Washington continues to stand financially committed to the financial, housing, and automotive sectors. Don’t be surprised if the CBO’s estimate rises again with their next report.