Friday, March 09, 2007

Big Numbers

It's federal budget season in Washington, which means it's the season of Big Numbers. Those of us who live here are used to Big Numbers all around us, the cost of living in the nation's capital being what it is, but when you talk about the federal budget, you talk about really Big Numbers. It was former Senator Everett Dirksen who once said something like, "A billion here, a billion there, and pretty soon it adds up to real money." And so it does.

Columnist Joel Achenbach wrote a tongue in cheek article in yesterday's Washington Post titled, "Crunched by the Numbers," which looked at the almost unimaginable vastness of the federal budget. Your government will spend almost 3 trillion dollars this year, and the federal deficit - the amount the government will spend that exceeds its income - next fiscal year is estimated to be 239 billion dollars. When you and I spend an amount that exceeds our checkbook balance, the bank comes down on us like the proverbial ton of bricks, beating us about our fiscal head and shoulders with fines and fees. It must be nice to be able to run a deficit of 239 billion dollars without penalty.

As I wrote in earlier posts about the tons of cash our government sent to Iraq, enormous numbers like these quickly cease to have any meaning for Real People like you and I. They become background noise. And that background noise fades even more into the background because the people who drive those incomprehensibly huge numbers don't talk to you honestly.

Consider this common real estate sign here in Northern Virginia: "New single family homes from the low 700's." Developers, builders, and real estate agents don't really want to say New single family homes starting at seven hundred and twenty-nine thousand dollars, because that's a scary number to someone with a five-figure income. It's much more palatable to say "low 700's" because people can imagine holding $700 in their hands, or seeing a balance of $700 in their checkbook. Seven hundred twenty-nine thousand isn't a meaningful number at the level of day-to-day living.

The federal budget is essentially meaningless to most people, except as it contributes to a sense of unreality about huge numbers. If the government can run a deficit of two hundred thirty-nine billion dollars, what's wrong with a lower-middle income family having four maxed-out credit cards with a combined balance of a mere eighty thousand dollars?

The difference, of course, is that you and I are eventually expected to repay that eighty thousand dollars to a lender, while the federal government simply borrows more money to cover its existing and future debts...which, of course, means fewer available dollars for you and I to borrow when we need them.

I don't pretend to understand economics on a governmental scale. I don't even pretend to understand it on my own small scale. If my checkbook balances to within about $10, I run out and buy myself a celebratory beer. But I wish I did understand more, because these numbers are scarier than any city-stomping monster on the late-night chiller theater.

Mr Achenbach's article, which you can read at http://www.washingtonpost.com/wp-dyn/content/article/2007/03/07/AR2007030702502.html, notes that the printed copy of the President's Budget comes in four huge volumes, with an appendix which alone runs to 1,237 pages of tiny type in two-columns per page. How can you and I know what this means? How can we understand what our government is doing with the money it takes from us in taxes?

We can't. But it doesn't matter, because the numbers are so vast we can't comprehend them, anyway.

I'm happy when my checkbook shows a four-figure balance and the numbers are all on the left side of the decimal point. It must be nice to have so much money that your budget figures can be rounded to the nearest billion dollars.

Have a good day. And don't bounce any checks. The government can do it with impunity. You can't.

More thoughts tomorrow.

Bilbo

1 comment:

Numeric Life said...

I can't agree you more on this.
Richard Feynman, physicist, Nobel laureate (1918-1988)once said:
"There are 10^11 stars in the galaxy. That used to be a huge number. But it's only a hundred billion. It's less than the national deficit! We used to call them astronomical numbers. Now we should call them economical numbers".