Bailouts worked, and made money for taxpayers

Shadowing the debate over raising the limit on the national debt is a populist suspicion that Congress is a tool of Wall Street, and the most-cited evidence of that is the 2008-09 bailout of the financial system. "You hear over and over that the bailout was a disaster, it cost taxpayers a fortune, we didn’t really need it, it didn’t work, it was a failure. It has become politically toxic, which inhibits reasoned public discussion about it," Allan Sloan writes for The Washington Post.

"But you know what? The bailout, by the numbers, clearly did work. Not only did it forestall a worldwide financial meltdown, but a Fortune analysis shows that U.S. taxpayers are also coming out ahead on it — by at least $40 billion, and possibly by as much as $100 billion eventually. This is our count for the entire bailout, not just the 3 percent represented by the massively unpopular Troubled Assets Relief Program. Yes, that’s right — TARP is only 3 percent of the bailout, even though it gets 97 percent of the attention."

Sloan goes on to explain the various bailouts, without which "There would have been trillions of dollars in losses, worldwide panic, missed payrolls and quite likely the onset of the Great Depression II." He also delivers what he said is the first accounting of the $35 billion tax expense of "special IRS rulings that allowed TARP recipients AIG, Citigroup, General Motors and Ally Financial (formerly GMAC) to use their tax losses in full, rather than being subject to 'change in control' rules designed to stop companies from being taken over for their tax losses."

It's those kinds of favors, and that kind of complexity, and those kinds of numbers, that make a lot of people grind their teeth and jump to conclusions about the bailouts, which began in the Bush administration and were continued by the Obama administration. Journalists should help Amercians distinguish between myth and fact. Now that the full story can be told, and we have it from such a reliable sources as Fortune magazine and Allan Sloan, it's a piece that is worth republishing, or at least excerpting and linking. Read it here.