Kindly explain just how the U.S. taxpayer will be asked to cough up nearly $ 1 trillion to pay for this bailout?

BY busadmin  September 24, 2008 at 7:35 PM EST

Question/Comment: Kindly explain just how the U.S. taxpayer will be asked to cough up nearly $ 1 trillion to pay for this bail out? Nobody has spelled this out in detail as far as I know. Can we expect our taxes to be doubled and if so over what period of time, etc? Would appreciate your reply in English. Thank you.

Paul Solman: Je prefere a reponder en Francais. But okay, you asked for English, which is my native language as luck would have it, so let me give it a whirl.

Let’s say we borrow the money for the bailout(s). That means interest on, to use your number, $1 trillion dollars. Right now, the U.S. is paying about 4% on borrowed money. Using that as a not-totally-made-up number, some $40 billion a year in new interest.

Right now, the U.S. taxpayer tab comes to about $2 trillion a year, not counting corporate taxes. $40 billion is 2% of that. So borrowing an extra trillion should add a mere couple of percent to our taxes. For the average U.S. family, that’s something less than $400 a year. For the median family (50% of the population make more than the median, 50% make less), it’s an even lower number. A bargain if it avoids a Great Depression, wouldn’t you say? Of course, if it doesn’t…