The bailout bill facing US taxpayers from Washington's frantic efforts to prop up America's floundering financial institutions is growing ever larger as the drive to underpin a system in danger of meltdown becomes more desperate. While the firefighters of the US Federal Reserve and the US Treasury focus on stemming the financial conflagration on Wall Street, the mounting cost of forestalling disaster is intensifying anxiety for officials and markets.

The tab for the government-backed rescues has reached scary proportions, with commitments exceeding $900 billion (£494 billion) and no end to the crisis in sight. A further $85 billion was added to the tally with yesterday's crisis loan to AIG.

What will be the ultimate impact on the finances of the US Government, when America is already the world's biggest debtor nation? The answer to this multitrillion-dollar question remains as foggy as the fate of the rescued institutions on which it will depend. But the worst-case scenarios are alarming.

The best-case scenarios are more reassuring, of course. For example, the Treasury expects that ultimately it could see gains for taxpayers from its plan to underpin America's housing market by buying up new home loan debt issued as mortgage-backed securities. It expects these long-run gains because the cost of its borrowing will be less than the interest payments on the new mortgages issued. Yet such an outcome is a long way off and, as the crisis spirals, experts point to John Maynard Keynes's comment that “in the long run we are all dead”.

In the meantime, the worst-case scenarios will exercise financial markets and, more privately, the Treasury and Congress. Even if the present crisis ends with something short of a wholesale state recapitalisation of the US banking system, these scenarios highlight the substantial jeopardy to American finances.

The threat is greatest from, and best illustrated by, the effective nationalisation of Fannie Mae and Freddie Mac, the state-backed wholesale mortgage lenders. Together, these institutions have backed US mortgages worth about $6,000 billion. The Congressional Budget Office argues that these liabilities should count towards America's national debt.

Although it is likely that Fannie and Freddie's assets would offset the debt total involved, the size of the headache is clear from the fact that, were all $6 trillion counted, US national debt would double to 80 per cent of GDP.

For now, the US Treasury is insistent - as Britain's Treasury was over Northern Rock - that Fannie's and Freddie's debt will not be counted this way. But the figures are telling, nonetheless.

More immediate are the implications of the Fannie and Freddie rescue for the US Government's deficit, its year-to-year borrowing. Again, the worst-case scenarios are frightening.

Paul Ashworth, of Capital Economics, notes that were the two agencies to be unable to raise more private funds through mortgage-backed securities, then the Treasury would need to spend about $450 billion a year to preserve the existing flow of home loans, while also shouldering the rising bill for existing mortgages going bad. On Mr Ashworth's bleakest case, this could triple the annual US budget deficit to more than $1,200 billion, or 8 per cent of GDP.

For now, no one expects such vast outlays. However, as the bills spiral by the day, the longer-term menace to America's national finances from the crisis remains all too clear.

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