How Will the Government Bailout Help the Average Citizen?

The 2008 government bailout that followed the collapse of a number of prominent financial and insurance companies will affect everyone in some way, from the CEOs of the companies in question to the average citizens who work within the economy.

Tax Cuts

When the bailout package went through the House of Representatives significant tax breaks were introduced. One of these was a change to the alternative minimum tax, which will reduce the tax obligation of many middle-class taxpayers. If you are one of these people, the bailout helped you by reducing your taxes.

Interest Rates

Since the bailout was paid for on deficit spending, interest rates have risen as the U.S. government borrows more money from the same markets as banks and other lenders. The increased demand increased price.

This means that if you are in the business of lending money or you just have money in the bank, your interest rates will increase as the market value of money increases.

Foreclosures

Citizens who are looking at foreclosure due to a troubled mortgage or mortgage-backed security may have the crisis averted by the bailout. This does not include all foreclosures, though, but rather only ones which pose a threat to the economy as a whole.

References

• Minneapolis Star Tribune: How Bailout Affects Consumers
• MSNBC: How the Massive Bailout Plan will Affect You