The $23 Trillion Myth

I keep watching Sarah Palin, John McCain, Glenn Beck and others toss out this “$23.7 trillion and counting” bank bailout that they seem to blame Obama for (even though it was first created under Bush’s watch and this administration agreed to move forward with it) so I decided to do what any prudent person should do. I chose to NOT trust them and look into it myself.

Here are some tidbits about this number.

Neil M. Barofsky, the special inspector general for the Troubled Asset Relief Program set up by the Treasury Department, came up with the largest number yet in testimony prepared for delivery Tuesday to a House committee. “The total potential federal government support could reach up to $23.7 trillion,” he stated.

But in the report accompanying his testimony, Mr. Barofsky conceded the number was vastly overblown. It includes estimates of the maximum cost of programs that have already been canceled or that never got under way.

It also assumes that every home mortgage backed by Fannie Mae or Freddie Mac goes into default, and all the homes turn out to be worthless. It assumes that every bank in America fails, with not a single asset worth even a penny. And it assumes that all of the assets held by money market mutual funds, including Treasury bills, turn out to be worthless.

It would also require the Treasury itself to default on securities purchased by the Federal Reserve system.

The sheer unreality of the number did not stop some members of Congress from taking the estimate seriously.

“The potential financial commitment the American taxpayers could be responsible for is of a size and scope that isn’t even imaginable,” said Representative Darrell E. Issa of California, the ranking Republican on the House Committee on Oversight and Government Reform, which will hold the hearing. “If you spent a million dollars a day going back to the birth of Christ, that wouldn’t even come close to just one trillion dollars — $23.7 trillion is a staggering figure.”

Mr. Issa’s staff distributed a briefing memo for Republicans on the committee that quoted the testimony relating to the $23.7 trillion number, but did not mention any of the qualifications contained in the report.

In an interview Monday evening, Mr. Barofsky said he did not view his testimony as misleading.

“We’re not suggesting that we’re are looking at a potential loss to the government of $23 trillion,” he said. “Our goal is to bring transparency, to put things in context.”

Asked what he thought the maximum total cost could be, he replied that it was not his job to estimate that, and declined to give a figure.

Mr. Barofsky has no authority to investigate most of the programs he discussed, so he has no access to some of the pertaining to documentation about them.

The list goes on and on. The only conclusion a sane person can possibly come to is this. Don’t believe them when they say the sky is falling. They are just busting out a tried and true political tactic. Scare the f@#$in shit out of them.

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