Almost every day, I read in the paper that the goverment is making money off of the bank bailout. Papers love good news, even if it is has little to do with reality. Today, the Financial Times [3] reported that the U.S. made $10 billion off bank repayments on the bailout funds. $10 billion, hooray! We are in the black!

Unfortunately, our recent comprehensive bailout accounting [4] puts taxpayers $2 trillion in the red. That is right, $2 trillion. While most of this money was in the form of loans, and American taxpayers might recoup those funds one day, it is foolish for the press to declare "Mission Accomplished" based on a thin study by the SNL Group. (Saturday Night Live strikes again?) Especially when taxpayers also lost $14 trillion in wages, retirement, college savings and housing wealth.

In reality, figuring out if taxpayers are winning and losing in the bailout stakes is complicated. Take the case of Citigroup [5]. The Washington Post [6] recently applauded the $8 billion taxpayers allegedly made on the bailout of that institution. The bailout of Citi is a long saga starting on the day we gave them $27 billion for a 27 percent stake in the firm that we could have bought outright for that amount.

But don't believe me, check out Dean Baker's blow-by-blow analysis in Talking Points Memo Cafe of all the hidden subsidies we have provided to Citi that underscored their earnings and bonuses, but have left taxpayers in the lurch. Click here for the full story [7]. Excerpts are below.

"First on the list of taxpayer handouts to Citi would be the "too big to fail" (TBTF) subsidy. This subsidy is the result of the fact that investors know that the government will not allow Citi to fail because it would create too much disruption in the economy. In effect, taxpayers are implicitly guaranteeing Citi's loans. This allows Citi to borrow at much lower cost than if it had to compete in the market like other businesses. In a paper I co-authored with Travis McArthur last year, we calculated that Citi's TBTF subsidy could be as much as $4.4 billion a year.

"If the markets expect this subsidy to persist (a safe bet given the current status of financial reform legislation), then the value of this subsidy would account for most of the current market value of Citi's stock. In effect, the government's profit is entirely due to the value of the government's guarantee. In Washington Post land, the government could make money by buying shares of a company's stock, offering to guarantee the company's debt, and then selling our shares at a gain when the market recognizes the value of the government's guarantee. Of course this strategy provides much larger gains to the other shareholders and allows the top executives to score billions in bonuses for being such shrewd managers, but in Washington Post land they don't pay attention to such things."

Baker also points to CMD's Wall Street Bailout Cost [8] table in his analysis.

Declaring "Mission Accomplished" on the bailout may make the media and some Democrats facing reelection happier, but the public, which is still suffering from one of the highest foreclosure and unemployment rates in history, is not buying it.