Eric Rauchway: How big a bailout?

Laura Conaway at Planet Money asks, “So how big is $700 billion, anyway?” And Brad Setser tells her, it’s five percent of GDP; it’s “real money.”

Good, but maybe we can do better: remember the terrible horrible no-good very bad New Deal, which was, like, socialist and all that? All federal non-defense spending during the New Deal was only a few percentage points of GDP bigger than just the bailout.

And remember—that $700 billion isn’t total payout, it’s how big the balance can be at any time. Theoretically, the total bailout could be even bigger.

UPDATED to add, the Reconstruction Finance Corporation, which was the Bank Bailer-Outer of the New Deal, had something like $2 billion to work with; $500 million appropriated and license to borrow $1.5 billion. $2 billion was about 3.5% of GDP in 1932.

UPDATED AGAIN to add, per Jonathan’s question, that federal nondefense spending has for the past four years or so been around 16% of GDP.