Huge bailouts a drop in bucket next to unpaid bill for retirees
Created on September 25, 2008
- To read about constitutional hurdles in the bailouts, click here.
- For a paper on next steps in the financial cleanup, click here.
- To see how to protect taxpayers and restore markets, click here.
- For principles to apply in government intervention, click here.
Staggering costs? Unfunded retiree benefits 50
and congressional hearings focus on the eye-popping bill for
government bailouts of failed financial houses on Wall Street and
What's gotten far less attention is a
price tag for tomorrow's taxpayers that's 50 times higher, to pay
for promised benefits for retirees in the Medicare and Social
No question, typical taxpayers think
$700 billion is a staggering price to pay for the missteps and
misjudgments of high-rolling financiers that prompted the nation's
mortgage meltdown. Add tens of billions in related bailouts,
including Fannie Mae and Freddie Mac, and taxpayers are being asked
to fork over $840 billion -- almost a trillion dollars -
to solve the credit crisis.
Who wouldn't want a small piece of that
in tax relief?
"The long-term answer isn't more federal
control, it's a return to free-market principles," Heritage
Foundation President Ed Feulner wrote in his weekly column before the
House voted Sept. 29 against the $700 billion deal struck by
congressional leaders and the White House.
"Faced with a crisis of this scale,"
Heritage's Stuart Butler and Edwin Meese argued, "lawmakers need to
consider steps that would be out of the question in more normal
times. That is why Congress must structure a recovery
plan that involves an extraordinary taxpayer commitment
to stabilizing the situation and restoring confidence in the
There's been no shortage of questionable add-ons
proposed for Uncle Sam's bailouts, and Congress has many steps still to take,
as Heritage fiscal experts David C. John and J.D. Foster detailed
in recent days. Even so, the estimated cost to taxpayers amounts to
a fraction of the nation's unfunded retirement benefits under
Social Security and Medicare.
"Imagine a taxpayer bailout even larger
than what's proposed for Wall Street," Heritage senior budget
analyst Brian Riedl writes in a new column. "Now imagine
it reoccurring every single year in perpetuity. That's our fiscal
future unless we fundamentally reform these unsustainable
Unless Congress acts, paying all
promised retiree benefits would require:
- Doubling all tax rates.
- Eliminating all other federal programs, including defense and
- Running massive budget deficits that eventually would capsize
"Today we're grappling with a very real financial crisis," Riedl
says. "While we cannot go back in time and fix it, we can start
acting now to prevent the next, clearly visible crisis."