Bailout or bust? Why Uncle Sam may just be getting started

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Where’s your federal bailout? Maybe not as far off as you think.

My column in The Times this weekend looks at the likelihood that the federal government is just getting started bailing out various sectors of the economy, given how severe this recession is shaping up to be.

First came the financial-sector bailout. Now the auto industry (or at least General Motors) seems certain to get some kind of aid package.

I note that home builders have their own idea about a federally sponsored bailout, in the form of super-low-rate government-sponsored mortgages. Also, many more homeowners are likely to need refinancing with government help in 2009. And cash-strapped states, including California, may see some form of federal loan as their only hope to close huge budget gaps.

One estimate I quote is that government outlays will have to balloon to 25% of gross domestic product, from 20% at mid-year, to offset the plunge in private-sector spending. And that would just get the economy back to a zero growth rate, not into expansion mode.

Read the column here.