In case you had forgotten, via James Hamilton:
A trillion dollars used to be a sum that never naturally came up in
normal conversation. Now all of a sudden, it's the standard unit we
seem to be using to talk about our economic problems and what we're
trying to do about them. Fortunately, I think I finally got a handle on
what $1 trillion really means.
A trillion dollars is about the total amount collected in income
taxes by the U.S. federal government in fiscal year 2006– $1.04
trillion, if you're curious to use the exact number.
That gives me a simple rule of thumb for personalizing these numbers.
If I want to know what an additional trillion dollars in government
borrowing or spending will mean for me, I just imagine what it would be
like to pay twice as much in federal income taxes for one year.
So, for example, with the President's proposed budget
calling for deficits of $1.75 trillion for 2009 and an additional $1.17
trillion for 2010, after 3 years of paying twice as much as I paid in
2006, I'd have about paid off my share of the bill for the first two
years of the proposal.
Read the whole thing.
Wow.
3 years of paying 2 x what I paid last year in federal income taxes is way too much for this citizen.
The deficit is going to blow by that $1.75T number like it was standing still. There’s not enough investment money in the world to lend the Obama Administration what it needs for it’s Porkgasms.
Holy cow! He has a point! No way am I voting for Obama in 2012 after 3 years of a 100% tax increase!
Light the torches! Fetch the pitchforks! Huzzah!
Indeed a lot of money. For those interested in understanding how those huge amounts have been reached, I recommend to read the first three papers by Ed Kane in his biography:
http://www2.bc.edu/~kaneeb/
You can read a summary in http://www.voxeu.org/index.php?q=node/317
I’m surprised to see a link to this. It’s not a very meaningful description. it’s not even that much if you think it will prevent another long depression.
after 3 years of paying twice as much as I paid in 2006, I’d have about paid off my share of the bill for the first two years of the proposal.
Great: Then after three years of paying for the first two years, you’re only a year behind on paying for the first three years. The shade of Tennessee Ernie Ford must be having a good laugh over this.
How about this: if one dollar is one second, then a million dollars is 12 days, a billion dollars is 30 years, and a trillion dollars is 30,000 years.
Typically pointless Republican hackwork on this analysis, especially considering the bulk of the deficit will be financed by bond issuance not tax increases.
Which will be paid off with future tax revenue. Or perhaps you favor 3 trillion dollars in spending cuts?
I think my potential future tax increase is looking small to my just-recent real estate and portfolio losses.
I know that’s a little apples and oranges, but then again it’s not. In a major recession everybody loses, one way or another. Everybody has to take their lumps.
The correct question is still how do we grow out of it, and recoup our various losses? Can anyone answer without falling to a party line?
odograph: The answer to your last question is,by all the evidence we see around us, a resounding “No!”.
Typically pointless Republican hackwork on this analysis, especially considering the bulk of the deficit will be financed by bond issuance not tax increases.
==
I thought bonds were not net wealth?.
“Talking about piling money until it reaches the moon or whatever is kind of unneccesary. A billion dollars is $3,300 for every man, woman, and child in the United States. Which is a significant of money, but it’s nothing crazy.”
Have you tried asking a 3 year old for $3,300 dollars? Good luck with that.
Think of it in terms of households. 1 trillion dollars is approximately $8,800 per household.
The main issue with this deficit is that it is not evenly distributed across the population. If it was all spent on roads, bridges, the power grid, then we would all at least have nicer roads, safer bridges and cheaper electricity. But it is not. Some of the deficit will finance infrastructure investment but most of it will take the form of transfers to particular groups, the unemployed, the uninsured, the broke, the investment banker. Yes those groups are suffering, some because of bad luck some because they screwed up, in any case we will now all have to pay for their daily expenses.
Think of it in terms of houses. The average house has declined $20K year-over-year.
In terms of our irrational human response to social issues … how much of this is a need to look at the smaller number because it is more of a political flashpoint? Here’s another one: Retirement assets plunge more than $2T
Is this focus on $800B of stimulus rational, or in a way escapism?
False Left-Right Paradigm, quit living in it. Candidates from both sides are seleced that conform with common interest of certain elites…at the expense of most of us. As long as the elites can keep the mainstream middle class republicans and democrats split apart and arguing over gay marriage, then they prevent unified anger over unfair payroll taxes that hurt the middle class and working poor the most.
They prevent unified opposition to Goldman Sachs/JP Morgan welfare which both Obama/Bush and Tyler supported.
Remember when a 100 Billion was a joke?
http://www.youtube.com/watch?v=cKKHSAE1gIs&feature=related
“Doesn’t seem possible that our tax revenue is just 7% of GDP…can anyone tell me what I’m missing here?”
“A trillion dollars is about the total amount collected in income taxes by the U.S. federal government in fiscal year 2006″
“there were another $1.4 trillion from the rest of the sources, as the link shows”
Oops, that’s what I get for skimming the article. Thanks.
I don’t think it is going to collapse, I think it’s sad that it is going to persist. I was really just being glib.
The republic has already collapsed. However, the government is thriving.
The thing that “scares” me about the budget is not so much that it spends so much, but that Democrats, Republicans (and most Americans) do not seem to grasp the concept of permanent wealth destruction.
How does inflation act as a solution when the (soon to be) three largest budget lines will be interest on the debt, Medicare and Social Security? They all adjust to inflation. Let alone the fact that inflation will lead to more wealth destruction and require either more inflation or even larger tax increases or spending cuts.
Joen,
But it does as it rolls over into new debt, and the average maturity of the debt isn’t actually all that long- about 5-7 years if memory serves.
See also:
http://www.robmillard.com/archives/off-the-wall-insights-how-much-is-a-trillion-dollars.html
The U.S. national debt increased by about $5 trillion during the Bush administration, which means that a trillion dollars is around what we still owe for every 19 months of George W. Bush.
Joen,
The debt is perpetual. The government rolls it all over on a continuous basis. With higher inflation expectations, the interest rate will rise on the rollovers, and the debt itself will grow in value.
“Criticizing GWB’s deficit spending is a very odd response to criticisms of Obama’s deficit spending, to say the least.”
Also, treating the two administrations as if they are somehow two distinct governments and not the continuation of the same body with some personel change
“The debt is perpetual. The government rolls it all over on a continuous basis. With higher inflation expectations, the interest rate will rise on the rollovers, and the debt itself will grow in value.”
Yacey,
I know, but think of this case (not the actual numbers). We owe $1 trillon in 1 month bills only. We usually roll the principal over and only pay interests. Suppose the price of a banana is $1, which means we owe 1 trillion bananas. Now we create inflation and prices double. We still owe $1 trillion but now that is only 500 billion bananas. Our debt has been reduced, this is called inflating away the debt. It is true that we will have to higher nominal interests and interest rates on our debt but in real terms we have to pay less interests (the real interest rate might end being higher because now creditors might incorporate a higher probability that we inflate our debt away in the future). In the end what I want to say is that if generate inflation then we will have to pay less bananas in interests each year.
Nothing substantial here, but the pics at this link are another (fun) perspective on $1000000000.
http://www.pagetutor.com/trillion/index.html
I wouldn’t worry about it. The rich people are going to pay for it.
Well, to repay the debt accrued from Bush’s eight years will require about five years of paying double. I don’t recall much outrage over that.
And I don’t recall Gore of Clinton-Gore being rewarded for paying down debt rather than adding to it. The conservatives were calling for tax cuts which would clearly increase debt, not reduce it.
Raivo Pommer
raimo1@hot.ee
Luftgeld
Finanzpolitik und Steuerwesen sind oft so furchtbar abstrakt. Nehmen wir zum Beispiel die Zahl 100 Milliarden. Was sind 100 Milliarden? Seit einiger Zeit treibt uns der Gedanke um, wie man die guten Taten veranschaulichen kann, die wir als Steuerbürger notleidenden Geldabfackelvereinigungen aus der Finanzbranche zukommen lassen sollen.
Die Lösung ist der Artikel „Geldregen“, den das Versandhaus Tom Wet im Katalog hat (www.tomwet.com). Die monetäre Pappröhre für 13,75 Euro ist eigentlich als Partygag gedacht, kann aber durchaus für ernsthafte Aufgaben eingesetzt werden. Durch einen Dreh an dem 60-Zentimeter-Rohr werden viele Geldscheine – standardmäßig handelt es sich um Spielgeld – mit einem schönen Knall per Druckluftpatrone meterhoch in die Luft katapultiert.
That is trillion http://mahalanobis.twoday.net/stories/5566462/
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