Echoes Of Iraq War: White House Claims Bailout Will Pay For Itself


Thursday, September 25, 2008

To justify the exorbitant cost of the bailout for the financial industry, Bush administration officials have been repeating the dubious claim that American taxpayers should expect to recover much, if not all, of the proposed $700 billion:

PAULSON: This is not an expenditure. … Money will come back in.

BERNANKE: What’s clear is that the $700 billion is not an expenditure. There’s going to be a substantial amount of recovery.

BUSH: Money will flow back to the Treasury as these assets are sold, and we expect that much, if not all, of the tax dollars we invest will be paid back.

White House spokesmen Ed Gillespie and Tony Fratto appeared on Fox News, repeating that “a lot of that money, and maybe all of it, will come back.” Watch a compilation:

As Paul Krugman writes, “The premise of the Paulson plan — though never stated bluntly — is that these assets are hugely underpriced, so that Uncle Sam can buy them at prices that help the financial industry a lot, without big losses for taxpayers. Are you prepared to bet $700 billion on that premise?”