Understanding the Numbers

The internet has been full of ideas from citizens about how the government might create new jobs and help to stimulate the economy. One goes something like this:
The federal government should offer citizens of the United States their own bailout package. Each person over the age of 50 would be given $500,000 with the stipulation that they must retire and buy a new car. This would free up millions of jobs for younger workers, while stimulating the auto industry.

While this idea may be amusing, some actually like the idea. The problem comes when you analyze the numbers. It also demonstrates how difficult it is for many to grasp the enormity of the numbers that Congress is so freely bandying about these days. I’d like to demonstrate part of this.

Currently more than eighty million (80,000,000) Americans are age 50 or older. Forget for a moment that many are already retired, but assuming we gave each $500,000, that would total forty trillion dollars ($40,000,000,000), or far more than the entire gross domestic product (GDP) which is currently only about fourteen trillion dollars ($14,000,000,000,000)per year. The GDP is the total value of the nations entire output. The federal government’s total tax collections, which are down from last year, will be around $2.2 trillion. The budget deficit, which is the amount we have over spent our income, already this year is expected to be about $1.2 trillion. We will have to borrow money again to pay for our shopping spree and that loan added to our already bulging credit card will total somewhere around $11.3 trillion. That is an amount approaching the nations entire output.

How do we get a handle on comprehending these enormous sums? It is not easy and the average person has great difficulty in trying to get their heads around it. Clearly many in Congress have not a clue. Let’s look at this a different way. Let us start with a billion. How big is that? Let us also say we take our average billionaire and tax him a billion dollars. How long would it take him to count his money out? If our billionaire started laying down his tax dollars at one dollar per second, every hour of the day, it would take him more than 31 years just to count out the money for that one tax year. That would be without interest and penalties since it took him so long to pay. If we were to ask that same billionaire to pay a trillion dollars, it would take him and his ancestors until the year 33,719AD to count out the money. With a modest interest of let’s say 5%, his ancestors would be counting until the end of time.

Somehow, we need to get people to understand both the size and the impacts of these government spending decisions. One of the reasons that it has gotten so far out of control is that so few understand how big they are and how destructive they are becoming to our economy. If the federal government was a private business, they would have long ago filed for bankruptcy. These practices cannot continue without a complete collapse of the monetary system. I urge all to call their congressman and plead with them to stop this runaway spending before it is too late. We all owe that to our own families.