Freedom Line Blog

As I note in my new weekly column, out today, President Obama’s State of the Union address on Tuesday night was littered with risible claims, not the least of which was his defense of the hundreds of billions of dollars poured into the financial and auto industries at the height of the nation’s economic crisis (efforts, in fairness, that began with the Bush Administration). Contrary to the president’s rosy recitations, however, the bailouts were not an unimpeachable success. As the AP reports today:

A government watchdog says U.S. taxpayers are still owed $132.9 billion that companies haven’t repaid from the financial bailout, and some of that will never be recovered.

The bailout launched at the height of the financial crisis in September 2008 will continue to exist for years, says a report issued Thursday by Christy Romero, the acting special inspector general for the $700 billion bailout. Some bailout programs, such as the effort to help homeowners avoid foreclosure by reducing mortgage payments, will last as late as 2017, costing the government an additional $51 billion or so.

This report won’t get much attention, simply because of the fact that a majority of the money has been paid back. That fact, however, reveals what may be the most damning legacy of the bailouts’ gonzo economics: the ability to think of a $133 billion shortfall as a rounding error.