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ANALYSIS: Bailout plan costliest rescue in U.S. history
Question of the Day
But economists said severity of the economic chaos spawned by the collapse of the housing and credit industries would take a long time to overcome and that there was no alternative to government intervention to deal with the economic catastrophe.
“There’s no question there is going to be pretty big fiscal costs, but you really have to consider what the alternatives will be. If they don’t do something with some kind of rescue package, you could get a financial market meltdown that would have serious consequences for Main Street America,” Mr. Lachman said.
Conservatives remained critical of the bailouts. Economist Alan Reynolds at the libertarian Cato Institute called the government’s intervention “creeping socialism.”
But Mr. Lachman added that “the bottom line is that we’ve got ourselves into a real mess, where the policy alternatives aren’t attractive. I see what they are doing as the least of the evils.”
Still, the price tag and the challenges posed by the bankrupt institutions that the government is bailing out remain huge by any historical comparison, though the White House Office of Management and Budget attempted to soften its fiscal impact Friday.
“It is too early to tell how the government’s plan to prevent further systemic risk to the market will impact the debt and deficit. We will implement an approach that balances the need to address problems with the market with the need to minimize the risk, exposure, loss of taxpayers dollars,” OMB said.
“While the maximum exposure is large, the potential also exists to recover nearly all or perhaps even more of the funds that we spend to purchase the assets as the market stabilizes,” the budget agency said.
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