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What Will Taxpayers Shell Out for All This?

Some bailouts are more risky, some less—and add up to $1 trillion

By Katherine Thompson, Newser Staff

Posted Sep 28, 2008 1:44 PM CDT

(Newser) – If a $700 billion federal bailout sounds like a lot, it is—but Washington will actually shell out $1 trillion in all of its present and proposed plans. Between Henry Paulson's plan, and bailouts of Bear Stearns, AIG, and Fannie Mae and Freddie Mac, the Wall Street Journal breaks down Washington's rescues into pieces to see how much of it will hit taxpayers' wallets.

Paulson's plan: The US is acquiring mortgage debt that may rise in value if markets recover. But they could lose value, leading to higher taxes or slashed government programs.
The Bear Stearns bailout cost chump change—just $29 billion—but some was spent on acquiring bad mortgages that could cost taxpayers.
The Treasury pumped $200 billion into Fannie and Freddie. Some of that may be lost as the firms' mortgage securities slide with home prices.
The US lent $85 billion to AIG, but it's still partly profitable, and agreed to steep interest rates and 80% government ownership.

The worst potential pitfall in all of this? That Wall Street will expect more bailouts the next time it gets into trouble.

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A protester holds a sign as he marches past the New York Stock Exchange during a rally against the Wall Street bailouts, Thursday, Sept. 25, 2008 in New York. (AP Photo/Mary Altaffer)

The current amount of the U.S. national debt is shown on the National Debt Clock in New York, Sept. 23, 2008. A bailout of the financial industry could boost the national debt to $11 trillion. (AP Photo)

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If the credit system isn't working, then firms cannot finance themselves. People cannot borrow to buy a car, to send a student to college, to buy a house. - Ben Bernanke, on why a bailout is important

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What Will Taxpayers Shell Out for All This?