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One of the big questions that many people — including myself on CNN Money — have been asking is this one: How much would we get if the bailout went to taxpayers instead of banks? We’re funding this bailout, so it is no surprise that people are getting a little anxious about who is getting this money. And how they’re using it. So, here is the answer that CNN Money came up with:
Answer: $9,718.49
To arrive at that figure, CNNMoney.com took the total of the bank bailout, $700 billion, and added that to the proposed stimulus spending in the House of Representatives bill, $819 billion. That totals $1.519 trillion.
We then divide that number by 156.3 million, which was the total number of U.S. filers in 2008.
So: $1.519 trillion divided by 156.3 million equals $9,718.49 per U.S. taxpayer.
Now, this figure only includes the latest two large economic stimulus bills (the one in Congress now and TARP passed last autumn). The real number spent on economic stimulus measures so far — most of it benefiting banks and some of it going to pay for executive bonuses and perks — is something right around $7.2 trillion. And that’s without the economic stimulus bill currently being considered. So, with a little quick and sloppy math, you can take that $9,718.49 and multiply it by seven and get pretty close with this estimate: If all of the economic stimulus spent so far had been giving to taxpayers, each would get right around $68,000.
How much could you do with $68,000? You could pay down debt, set money aside for savings, and do some consumer spending. (Of course, part of that stimulus is the money from the tax rebate received, so I suppose you can subtract the money you got last spring from the total.) The benefit increases in number slightly if you look at households instead of taxpayers: According to the Census Bureau, there are about 126 million households (as opposed to 156 million taxpayers).
What’s the excuse for not splitting the money amongst taxpayers?
Even though it is obviously too late to recall the trillions spent already, close to $10,000 would be quite helpful. But we won’t get it. CNN Money also answered the question regarding why taxpayers will be lucky to see only the possible tax cut included in the current economic stimulus bill:
But the government is looking to have that money get spent and to have it multiplied somehow. Our economy is based on people spending money. So people saving money doesn’t help.
And there you have it: Instead of helping us completely makeover the economy, our leaders are set on keeping the current model of growth through (unsustainable) debt-fueld consumer spending. Personally, I find it heartening that more Americans are becoming interested in saving. Also, it is worth noting that paying down your debt isn’t any more helpful to the economy, either. Although I contend that if more Americans were able to pay down debt, it would prevent some banking problems through fewer defaults. It’s sort of a trickle up effect.
Of course, just giving us all between $15,000 and $50,000 apiece to begin with would have been cheaper. We could have paid down credit cards, made a big enough mortgage payments to qualify for refinancing and loan modifications, and maybe even bought cars (you know, a couple thousand down and then 72-month financing). All of this would have freed up all sorts of resources for us to be spending again — just like the government wants.
Now, don’t get me wrong: I’m not a big fan of any bailout. But I do wonder if — since the money is going to be spent anyway — it would be less wasted coming back to us rather than going to fat cats.
What do you think? Should the bailout money be given to taxpayers?
I have a slightly different suggestion:
Allow everybody credit upto have 5 times their salary. This should be at 0% insterest rate and with delayed payments for the duration of next 8 years.
This will allow people to payoff their mortgages, credit cards, car loans etc. and start saving money for the next eight years to replenish the lost values of 401K plans.
It will also allow people have peace of mind and the resulting political & tranquility, thus saving millions of marriages from collapsing or saving people from committing suicide.
It will also save the childhoods of countless children instead of being scarred by this financial storm brought on artificially by the over-greedy practices of banks.
I think our bankers and wall street types live in a fantasy land, quite disconnected with the lives of the ordinary Americans. If they were able to reap the benfit of their greedy schemes, then let them fail now because they will never learn.
We need to usher in a new era of responsible banks sans the continuation of greedy schemes of the past. Who in the right mind would offer 100′s of credit cards to every household every year or extend credit to the pets?
I agree that there are definite problems with the credit scoring system — not the least that we have to pay to look at our own information!
I would like to see every one take a credit awareness class after the complete this course their credit score on all three reports be reset to 700 and they are on probation for 12 months one goof up and they go back to their first score.All bad information would be removed and they would have a fresh start like a chapter 7 but this would revert back if that consumer screws up with in 12 months after that it would be treated like a normal report.Then folks that take care of their credit and that would boost the credit in the nation and people can buy cars and homes with in their means only no more getting over your head.
Banks have new guide lines on job and earning and would deny any loans that would cause problems down the road or at least that’s how it should work.
for a limited time not 7-10 years for minor stuff that drags your score down the drain.
They should limit employers to run credit checks only when money or high security is in the mix not regular jobs.
That just makes finding a job harder and the problem worse.
Those reports are incorrect most of the time with bottom feeders reporting more than once on one item and now that some scores will not be given to the consumer just the lender makes it hard to keep and eye on your credit and take care of it.They should limit items for 2 years and remove inquires when you run credit not 12 months they cost 3-4 points each.
These points are good but we are missing the big picture “Credit”that magic number called Fico score
it is worse than your social security number.
There has to be a credit reporting reform act of some kind if my numbers are right 35-40% of the nation has some form of bad credit.
And it is getting worse by the month people who have really clean credit go out and buy what they need like a new car they trade in a used car or a 10-20% down pmt if they use a trade in that dealer keeps the very good trades and then takes the other trades they don’t want to the action to be sold to lower level dealers.
They try to sell to sub prime loan folks at a very high interest loan from 18-24% and with a $500 and down payment these folks are not any better off they might have a car now until they hit a bump in the road and they find that their car has been taken by the repo man and their credit just go worse.I know a man that got laid off from cat and the bills started getting behind and so did his credit as you know employers run a credit check on just about any job you apply for and that is more monkeys on your back.
I think that items on your report should be limited
I agree that more citizen activism is needed. We need to participate in the process. Until we do, we’ll remain subject to the status quo.
I do agree whit you we the American Peoplneed to take back our money. I am Horrified by the high amount we are forced to give to the rich. I am upset with the do nothing sit around and let the polititions figure it out. What we need to do is take action and stop the bailout. We need to take control of this situation because we are the ones feeling the pain and we will untile we stand up for ourselfes and Demand a real change of the system that has kept up subsevient and now a system that is holding us by a noose leading us with fear demanding we do this or that noose will hold tight and will not let go.
1185 days ago
[...] Should the Bailout Go To the Taxpayers Instead?Thoughts on bailout money [...]
@Katja: I tend to agree with you, especially about how the banks are becoming a money pit. They’re getting some nice capital at our expense — and sitting on it.
@fizzexman: Interesting idea. I agree that something needs to be done to wean our economy away from increasing reliance on debt.
One of the essential flaws to our fractional reserve banking is that is essentially a pyramid scheme. At any point in time the money lent out is not enough to pay back the loans made, so there must be a continuous increase is lending. We need to break the monopoly of the federal reserve by allowing competitive note issue, where the money issued by each bank is backed by their assets. This makes it possible for the economy to operate without continuously expanding the debt base.
I also wanted to add that in the current scenario, where the money is given directly to the banks, not only are the people not “helped out”, but the people still not credit worthy because of the debt we’re already carrying. So who can keep borrowing to keep the banks from failing anyway? We’re just turning the banks into a money pit.
Give us the money. Don’t worry about inflation, it’s kind of artificial in this case, right? If people pay off debt, demand doesn’t skyrocket because some of that money goes to pay for things we already bought, not things we are buying. By the time demand hits, companies can respond by re-hiring the 3.6 million people who’ve been laid off since the beginning of 2008 and returning to the budgets/financial operations they had before. They don’t even have to increase salaries – in this scenario, everyone has gotten about $60 grand to make themselves more stable. If they didn’t freeze their mortgages by converting to 30-year fixed or decrease debt by paying something off, and are demanding a huge salary increase to compensate, it’s their problem. There isn’t any reason for prices of goods to go up for quite a while.
You make a good point, Austin. We’ve already give trillions to the banks in the name of economic stimulus, and the money hasn’t been used for the purpose it was intended for. Giving the money to us would provide a better chance that it would actually accomplish its goals.
I had this exact conversation with my dad last night on the phone. If the tax payers were given that money – it would definitely end up in the hands of the banks!
Whereas, if the banks are given the money, we aren’t very likely to see a dime. The idea that banks should get the money is very unAmerican in my opinion.
Was it Thomas Jefferson that warned against the power of banks? I think it was him who said something like “make sure you don’t let the banks print their own money – it will jeopardize our democracy”
‘Trickle down’ doesn’t work. The rich get richer and the middle class is getting wiped out.
Ooooh. There we go! Pay off debt, help the banks get some cash and liquidity, and then head out to do some consumer spending. THAT’S how to help the economy. Imagine if everyone could do that…
Hey, if someone gave me 5 grand to pay off my car I would take the savings of the monthly car payment and look to go to Disney World for week.
Yes I would still have debt, I am trying to snowball it the best I can. We just need a big carrot to get our debt paid and some saved so a trip to Disney is the reward if we can reach our milestone.
Which a small bailout of me could mutliply quickly with my plan as that trip hopefully of December 2009 or early 2010 could be guaranteed to occur in 2009.
@FFB: Inflation is a very real problem. It could probably be limited, though, if people used the money to pay off consumer. Inflation is likely to come anyway (although not as dramatic, I guess), due to the large amounts of money that will soon be in the supply. Unfortunately, the point of the stimulus is not to change our spending habits. Rather, our leaders want us to persist in the habits that we have been following for years. There are always problems when the government starts handing out money — whether it is to big banks or to individuals.
@Jeff: It is scary that 70% of our economy is based on consumer spending — most of it debt-fueled. Whether the government gives the money to others or to individuals, the result is the same: A continued focus on the current economic status quo. And that will never be good for individual finances.
1190 days ago
[...] the banks, etc. I did, however, run across something that was pretty interesting; an excerpt from yieldingwealth.com answering the question, “How much would we get if the bailout went to taxpayers instead of [...]
It is scary that we continue to build our economy on a model that requires us to continually buy, buy, buy in order to sustain growth. I’m like you. I think it is a good thing that this recession is causing Americans to be more conservative with their money. Is our government really serving us well with their strategy? It is highly debatable in my opinion!
One big problem with everyone getting let’s say $50,000: Inflation! I think $50K is enough that people would save and pay bills and still have a lot to go out and spend. Sounds good but it would cause demand to rise which would cause prices to rise. Now the country needs us to consume but the resulting inflation would hurt us for a while. It’s a big reason past stimulus checks were relatively small amounts; so inflation doesn’t spike.
And then what happens when the $50K runs out? It still doesn’t change our spending habits overall.
I’m not saying the system in place is correct either, just saying there’s problems to giving individuals the money instead.