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About That $700 Billion...

Pete Springer/OPB

What is happening to the taxpayer dollars the federal government allocated to help our ailing economy?

Over a month ago, Congress approved $700 billion to buy bank debt gone bad and some critics are beginning to wonder if the Treasury is taking the plan in the wrong direction. About a third of the money has been allocated and none of it has gone to buying up so-called toxic assets. Instead, $250 billion has been set aside to purchase shares in banks deemed fiscally healthy. The idea is that injecting these banks with capital will motivate already robust financial institutions to begin lending again, which will help to thaw out the frozen credit market. The government is trying to figure out how best to motivate banks to lend out the money rather than hanging onto it or spending it on acquisitions and executive pay.

Meanwhile, some members of Congress are saying the troubled auto industry should get a piece of the $700 billion pie and government-owned Fannie Mae and Freddie Mac announced a separate plan today to help struggling homeowners renegotiate their mortgages.

How is all of this government spending connected? What are its limits? Where do you want to see your tax dollars go to help our ailing economy?


Photo credit: velo city / Flickr / Creative Commons

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