Read more about Wall Street’s ongoing crisis.
Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson urged Congress Tuesday morning to authorize a $700 billion bailout of struggling financial institutions. Although the congressional leadership has indicated its willingness to get onboard with the plan, rank-and-file lawmakers from both parties are balking at what’s been called the largest bailout in U.S. history. Just how much is $700 billion?
A lot, or not that much. There are about 300 million men, women, and children currently living in the United States, so the bailout is equal to roughly $2,300 per person. That’s right around what we each paid, on average, for gas and oil in 2006 ($2,227) and a bit less than our average personal tax burden ($2,432).
Stepping away from average Joes, $700 billion is equal to about 12 Bill Gateses. The assembled net worth of the Forbes 400 is $1.57 trillion, or more than twice the cost of the bailout. Titanic, one of the highest-grossing movies of all time, raked in $1.8 billion from the worldwide box office, so James Cameron would have to make roughly 381 Titanic-sized blockbusters to settle Wall Street’s debts. According to the Centers for Disease Control, the single-year cost of obesity in the United States was $117 billion in 2000, or about one-sixth the bailout—although that number has been disputed.
If the federal government siphoned off Florida’s gross domestic product, we could cover the bailout. Invading the Netherlands might be advisable—that nation’s GDP was $768.7 billion last year. Of course, invasions cost a lot of money. Back in 2003, the Bush administration told Congress that the Iraq war would cost between $60 billion and $100 billion, but it’s estimated that, so far, we’ve spent about $600 billion. Should the Treasury receive authority from Congress to borrow $700 billion, the national debt will rise by only about 7 percent. Right now, it’s sitting at $9.6 trillion.
Let’s say Slate charged its advertisers $30 per 1,000 ad impressions, a common industry rate. And let’s imagine for a second that the federal government decided to nationalize Slate in order to pay for the bailout. We’d need our readers to rack up enough page views to see 23.3 trillion banner ads before the feds were satisfied.
For historical perspective, consider that the Marshall Plan, which helped finance the recovery of Western Europe after World War II, cost the United States about $13 billion. Of course, in 2008 dollars that’s more like $100 billion. And Niall Ferguson has estimated that as a comparable share of the U.S. GDP, it’s more like $740 billion.
Lastly, in apocalyptic terms, $700 billion really isn’t all that much. If nothing is done to change the way we finance Social Security, the trust fund reserves will be exhausted by 2041. This means that, in 75 years, there’ll be a shortfall of $4.3 trillion—or about six bailouts. According to the Stern report (issued by U.K. economist Sir Nicholas Stern), global climate change could cost the planet $9 trillion (or 12.86 bailouts) if we don’t address the problem within the next decade or so.
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Explainer thanks Scott Berridge of the Bureau of Labor Statistics.