How much will taxpayers shoulder?

[Taem]

According to a July 2008 estimate, there are currently 303,824,640 people living in the United States. Of this, it seems to that 203,987,724 are of working age and capable of paying taxes (excluding disabilities and unemployment), however the report has only 153,100,000,000 working. I assume this number was derived from W4 information, but then how do illegal workers factor in? Does this mean even less Americans are working? Anyways, my whole point is if American's have to shoulder this entire bailout package on their own without government help, then it would seem every working American will have to pay $7,000,000,000,000/153.1-mil people = $45.74 dollars. Oh noes... Even if there were interest on this thing (which there shouldn't be), that does not seem like too much money if you ask me. So, why is congress talking about raising the tax rate and charging Americans for the next X-years? What, they can't tack on an additional $45.00 to what I owe at the end of the year? How much will they actually get adding an additional tax over the course of several years? I bet a hell-of-a-lot more than $45.00 per person. This all seems very conspicuous if you ask me.

[vor_lord]

According to a July 2008 estimate, there are currently 303,824,640 people living in the United States. Of this, it seems to that 203,987,724 are of working age and capable of paying taxes (excluding disabilities and unemployment), however the report has only 153,100,000,000 working.

Unemployed, disabilities, and those who do not need to work. I have a good job -- my wife does not need to work.

[Delc]

You are off by 2 zeros. Its ~$4500, which to many people is kind of a lot of money.

[Kevin]

You are off by 2 zeros. Its ~$4500, which to many people is kind of a lot of money.

Actually he's off by 3 zeros.

he did

$7,000,000,000,000 <----------- (which is correctly $7 trillion)
--------------------------- = ~$45
153,100,000,000 <--------------- (which is an erroneous 153 billion people)


it should be

$7,000,000,000,000
--------------------------- = $45,721
153,100,000


And considering $50,233.00 was the median HOUSEHOLD income in the US in 2007 (see http://en.wikipedia.org/wiki/Household_inc..._United_States) I'd say that is a hell of a lot to tack on to someones taxes at the end of the year. It's nearly the average income of the american family.

[Taem]

Actually he's off by 3 zeros.

he did

$7,000,000,000,000 <----------- (which is correctly $7 trillion)
--------------------------- = ~$45
153,100,000,000 <--------------- (which is an erroneous 153 billion people)
it should be

$7,000,000,000,000
--------------------------- = $45,721
153,100,000
And considering $50,233.00 was the median HOUSEHOLD income in the US in 2007 (see http://en.wikipedia.org/wiki/Household_inc..._United_States) I'd say that is a hell of a lot to tack on to someones taxes at the end of the year. It's nearly the average income of the american family.

That's what I get for using the calculator at work which adds zeros at the end.

[Assur]

That's what I get for using the calculator at work which adds zeros at the end.

Do you do the billing at a law firm?:ph34r:

[Taem]

Do you do the billing at a law firm?:ph34r:

Oh, it's not 7-bil, its 700-bil. Quite a difference! Now that's $4572.18 per person. That really sucks <_<. And I read the Senate wants to add a further 100-bil to it, making the total 800-bil. At 800-bil, that's $5225.34 per person. Ouch! Over the course of 5-years, that could potentially be $1045.07 a year per person in taxes, however this amount could vary depending on several factors, such as a scaling tax rate based on how much you make annually, and of course how much the US-gov will burden themselves with making up. IMO, I didn't have my house forclosed, nor did any of my relatives or close friends. That's not to say I don't know people who had their houses forclosed, yet I'm also not the one who approved sub-prime loans back when Clinton was president, nor would I have if I had been in power. Why should I have to carry the burdon of failure for my country when I'm not dirrectly nor indirrectly responsible for this mess in the first place? Oh well, I guess when times are tough anyways, looking at the cold hard facts just makes things a bit more irritating.

[Jester]

Actually he's off by 3 zeros.

he did

$7,000,000,000,000 <----------- (which is correctly $7 trillion)
--------------------------- = ~$45
153,100,000,000 <--------------- (which is an erroneous 153 billion people)
it should be

$7,000,000,000,000
--------------------------- = $45,721
153,100,000
And considering $50,233.00 was the median HOUSEHOLD income in the US in 2007 (see http://en.wikipedia.org/wiki/Household_inc..._United_States) I'd say that is a hell of a lot to tack on to someones taxes at the end of the year. It's nearly the average income of the american family.

Why is 7 trillion being used? The amount of the bailout is 700 billion. That would put the correct value at $4700 per working person, or $2350 per capita, in ballpark terms. Very, very substantial, but not backbreaking.

Of course, this is all very contingent on how that 700 billion is being used, and what the gains from that are. Obviously, the idea is economic stimulus, and that can find its way either back into government hands directly (reducing the long-run need to tax it out of the population) or into the pockets of Americans (reducing the cost per person). It also could prevent future losses, which doesn't show up on a balance sheet, but might be tremendously relevant if the economy hasn't hit the floor yet. If the money goes towards buying bad assets, if those assets turn out to be worth something after a recovery, then there could even conceivably be a profit turned over the whole affair. I think that's terribly unlikely, but it's another thing to consider.

-Jester

[Crusader]

And of course there will be an interest rate. You're borrowing from other nations after all. China isn't exactly a charity institution.

[Kevin]

Why is 7 trillion being used? The amount of the bailout is 700 billion. That would put the correct value at $4700 per working person, or $2350 per capita, in ballpark terms. Very, very substantial, but not backbreaking.

Because I hadn't paid that much attention to it either and was copying his numbers to try and find the error and made an error of my own. I might have been thinking of the total national deficit. Of course that is actually 10 trillion so that must not be it. I might have been thinking of something I was doing at work at the time. Who knows. I used a wrong number but at least I made it clear that it was wrong. :)



Of course the numbers are so stupidly huge at this point I lose scope on them. With the big 3 automakers asking for what? $45 billion for themselves as well it all just swallows me up. Of course this is why I like to work with numbers this big in exponential notation. 7x10^11 that is bailout.


This all of course reminds me of a Richard Feynman quote.

"There are 10^11 stars in the galaxy. That used to be a huge
number. But it's only a hundred billion. It's less than the
national deficit! We used to call them astronomical numbers. Now
we should call them economical numbers." -- Richard Feynman

Of course MEAT already caught my error in correcting his error. But my error is because the numbers are so damn big that I stop paying attention. I'm a horrible citizen, I know. But you can't take this number in isolation, like you said. You can't ignore the 10 trillion that this country already owes for stuff like this anyway. I haven't looked at the details but this bailout looks like it will be paid like a lot of other government payouts. It will be debt we owe ourselves, like much of the national deficit already is. The effects of the national deficit are part of what is currently showing and it will get worse the weaker the dollar gets.


Now I'm not saying that preventing the economy from tanking completely is a bad thing, but none of this can be taken in isolation.

Anyway, the nitpicking was valuable and the numbers are fixed and they are still pretty nuts. If you just consider that it takes most Americans 30 or so years to pay off a 100K loan. Many take 5-10 years for a 10-20K loan. 2300 to 2400 per person is pretty significant. I'm currently working 2 jobs, both of which require me to have a college degree, and that still takes me a month to make if I spend nothing else. Of course this is why I'm still looking for another job. :)

[kandrathe]

Oh, it's not 7-bil, its 700-bil. Quite a difference! Now that's $4572.18 per person. That really sucks <_<. And I read the Senate wants to add a further 100-bil to it, making the total 800-bil. At 800-bil, that's $5225.34 per person. Ouch! Over the course of 5-years, that could potentially be $1045.07 a year per person in taxes, however this amount could vary depending on several factors, such as a scaling tax rate based on how much you make annually, and of course how much the US-gov will burden themselves with making up. IMO, I didn't have my house forclosed, nor did any of my relatives or close friends. That's not to say I don't know people who had their houses forclosed, yet I'm also not the one who approved sub-prime loans back when Clinton was president, nor would I have if I had been in power. Why should I have to carry the burdon of failure for my country when I'm not dirrectly nor indirrectly responsible for this mess in the first place? Oh well, I guess when times are tough anyways, looking at the cold hard facts just makes things a bit more irritating.

When the government is counting its own hand outs as income toward buying a home we are in trouble. It is outrageous that the tax payers are bailing out this mess.

The problem began with China's rapid capital growth making borrowing too easy (that is, there was a glut of money in the international banking system), which gave lenders a false sense of security in lending that money to high risk mortgages. Then, to make matters worse, in order to not feel queasy about individual junk loans the brain trusts in the mortgage industry decided to bundle these high risk loans into traded securities called "Mortgage Backed Securities".

Who should pay? I'd say it should ultimately be the shareholders who own, and the employees who work for the companies who played around with the mortgage backed securities, and the poor home owners who got bamboozled into thinking they could buy a house on food stamp money. But, that will not be. We cannot make those poor shareholders and employees bear the burden of failed banking institutions whose leadership made bad decisions, or let the poor, and in this case it is the literal poor bear the burden of foreclosure on a home they cannot afford. So, instead, those people who earn incomes will shoulder the burden of other peoples mistakes. That is modern America, where it is legal for the government to reach into your pockets and take whatever it wants to make everyone else feel good about themselves.

[Concillian]

It is outrageous that the tax payers are bailing out this mess.

Why?

Taxpayers created the mess.

Sure you can put some blame on the banks for not using the right qualification criteria, but every single person I've talked to who has been in a foreclosure situation got into a loan that it would not take a mathematician to figure out they were eventually going to default on the loan if the economy stayed flat. Maybe they could have afforded it for another couple years if the economy didn't change, but payments would still eventually balloon to something unbearable.

Taxpayers made the decision to put us here. They had to sign on the dotted line and initial 2 dozen other sheets of paper on loan applications.

I bought a house 5 years ago. Yes, I was marketed some atrocious loans. However, that does not absolve me of my responsibility to only get into loans that I can afford. Blaming the banks for this is akin to someone with huge credit card bills from buying junk they don't need blaming commercials and mall salesmen. You can't trust commercials and salesmen as your only source of information, especially on a quarter or half a million dollar purchase. A rather substantial portion of the population did just that.

[Zenda]

... I think that's terribly unlikely, but it's another thing to consider.

It may be unlikely that profit will be made (for everyone), but it's pretty sure expected to turn out even. And as long as governments are counting on that, noone will be taxed specifically for these bail-outs. They want everyone to go on as usual, not stop buying things and make matters worse.

Besides, it's not that all this money is actually going to be paid in real dollars. If announcing these bail-outs alone is enough to restore faith in the economy already, they have served their purpose. And since it's about virtual transactions anyway, it hardly matters when they actually occur.

As Jester says, the idea is just (another) economic stimulus. These bail-outs are meant to strengthen the confidence of investors and public, not to frighten them. Recession starts when people withdraw their money from the economic stream. Even when it's virtual money, like bank savings and shares.

As you may know, we have the same issue here in the Netherlands. I believe we were the first to 'inject' some large sums into banks during this episode. No fuzz, our government simply happily announced it. We Dutch are pretty clever when it comes to money making, you know. Ofcourse, we too had almost half the population complaining about presumed taxes. But the smarter half does what we are supposed to do, which is not worrying about it. Unfortunately, Americans have learned to fear just about everything, and that may be a big problem now. For example, Kandrathe's blaming the Chinese will do no good, because it will make people think they are a helpless victim. You don't want doomsayers around, right now.

[kandrathe]

Why? Taxpayers created the mess.

Your argument is fallacious. All taxpayers do not have loans, and for the subset of taxpayers that do have loans many are perfectly solvent. Then again, all loan holders are not taxpayers. For example, the people who justify a home loan on AFDC and welfare payments.

Your implication however is that loan holders created the mess, and specifically the loan holders who should not be loan holders. That was one subset I mentioned. The other culprit I mentioned was the lenders who offered risky loans and repackaged them into MBS's. Not all lenders, just the ones who were stupid and took the stupid risks.

You might as well broaden the category to "humans", because after all it was "humans" that created this mess. All "humans" must pay!

[kandrathe]

For example, Kandrathe's blaming the Chinese will do no good, because it will make people think they are a helpless victim. You don't want doomsayers around, right now.

I'm only blaming the Chinese for being prosperous, which is hardly something we should get upset about. I do hold a grudge regarding their currency manipulation, and my weak kneed government's refusal to do anything about it. But, be that as it may, they quickly piled up a ton of capital that needed to be reinvested somewhere. For every hungry mouth fed there is a pile of poo somewhere. In this case, the poo ended up on Wallstreet.

[Zenda]

I do hold a grudge regarding their currency manipulation, and my weak kneed government's refusal to do anything about it.

And what should your government have done about it? Manipulate the value of the dollar? Cancel all trade agreements with them? Accuse them of terrorism? Or just start a war right away?

So you think it's bad when the Chinese take measurements to stabilize their economy that may have hurt you, but that it's allright to have the entire world economy depend on your dollars?

[kandrathe]

And what should your government have done about it? Manipulate the value of the dollar? Cancel all trade agreements with them?

There are many other options in the economic tool kit.

Accuse them of terrorism? Or just start a war right away?

Yup, let's just over react and nuke the planet.

So you think it's bad when the Chinese take measurements to stabilize their economy that may have hurt you, but that it's alright to have the entire world economy depend on your dollars?

You really don't understand this topic. It's not about economic stabilization, China is building its economy by unfairly manipulating the global economy. It's unfair to take advantage of the global monetary market in this way.

China pegs the yuan to the dollar at a fixed rate and strictly regulates imports and the allocation of foreign exchange. In order to maintain the yuan's fixed value, China must create a residual supply of yuan to counter growing demand for its currency; China achieves this by buying dollars in foreign exchange markets. Between December 2000 and July 2003, China more than doubled its foreign reserve holdings from $168 billion (16% of its GDP) to $361 billion (31% of its GDP).

How should the United States respond? On nine occasions between 1988 and 1992, the U.S. Treasury found that similar external surpluses accompanied by much smaller accumulation of foreign reserves constituted evidence that countries—including China—were manipulating their currency's value for competitive trade advantage. When such a finding is made, U.S. law requires the Treasury Secretary to undertake negotiations to end such manipulation. Current evidence indicates that China is engaged in just such a manipulation of the yuan for competitive gain.

Here is a Blog entry by AFL-CIO Secretary Treasurer Richard Trumka on the topic from a year ago; Chinese currency manipulation puts a stranglehold on the middle class.

[Zenda]

You really don't understand this topic.

Yeah, sure.

So, China takes unfair advantage of the global monetary market, by "buying dollars in foreign exchange markets. Between December 2000 and July 2003, China more than doubled its foreign reserve holdings from $168 billion (16% of its GDP) to $361 billion (31% of its GDP)."

Let me get this straight. Five years and more ago, they bought $193 billion worth of dollars, effectively increasing the value of a dollar, which had a negative influence. This caused a problem so big, that you need $700 billion to clean it up. Right?

Ah well, I suppose it's reasonable to have a law that demands to start negotiations in situations like this. After all, having all the world use your currency for global commerce isn't without risks :whistling:

No, it's not the Chinese. Your privatized health care system is much more to blame. The most occurring reason for forclosures in the US seems to be health problems.

Medical Reasons Behind Foreclosure of Houses That Are Homes

[Jester]

So, China takes unfair advantage of the global monetary market, by "buying dollars in foreign exchange markets. Between December 2000 and July 2003, China more than doubled its foreign reserve holdings from $168 billion (16% of its GDP) to $361 billion (31% of its GDP)."

You're comparing one interval (2000-2003) with a bailout that happened five years afterwards, without adjusting the values appropriately. By late 2008, Chinese foreign reserves were somewhere in the neigbourhood of 1.8 trillion $US.

-Jester

[kandrathe]

You're comparing one interval (2000-2003) with a bailout that happened five years afterwards, without adjusting the values appropriately. By late 2008, Chinese foreign reserves were somewhere in the neigbourhood of 1.8 trillion $US.

-Jester

It's been a problem for the entire 8 yr Bush administration. Google it and you will see articles spanning the last 8 years. It's still a problem that China continues to exploit.

Check out Sen. Jim Bunning's bill; S. 2813: China Currency Manipulation Act of 2008