The value of money has lost its meaning
TERRY SAVAGE email@example.com Sep 27, 2010
Today, the word "billion" has become a "rounding error" -- a sum too trivial to notice in the larger scheme of the federal budget.
Updated: May 3, 2013 12:14PM
It all adds up. That was the point made by our own Illinois senator, the legendary Everett Dirksen, back in 1951 when he is said to have exclaimed: "A billion here, a billion there, it all adds up!"
Now, more than half a century later, we're talking equally casually about TRILLIONS of dollars.
As I scrolled through the legendary wit of Dirksen at www.DirksenCenter.org, another of his sayings caught my eye: "We are becoming so accustomed to millions and billions of dollars that ''thousands'' has almost passed out of the dictionary." That was in January 1964.
Today, the word "billion" has become a "rounding error" -- a sum too trivial to notice in the larger scheme of the federal budget, much as "thousands" had no meaning back then.
Certainly, America has grown in the last half century, our output has soared, and our population has multiplied. But in honor of Dirksen, I think it's time to point out that a billion is still a billion. And a trillion is beyond comprehension.
What's a billion?
Actually, there's some debate about what a billion is. The common definition is simple: One billion has 1,000 millions in it. Or, you could say it has 10,000,000 hundreds in it. A billion has 1,000,000 thousands in it. Those are a lot of zeroes.
Interestingly, only in North America and the general scientific community is this number (1,000,000,000) called a "billion." Most European countries call this number either "one thousand million" or, in some cases, a "milliard."
You may have seen an e-mail going around the Internet offering comparisons of a billion. It concludes that:
"A billion seconds ago it was 1959.
"A billion minutes ago Jesus was alive.
"A billion hours ago our ancestors were living in the Stone Age."
Double checking the veracity of these comparisons at Snopes results in a finding that the numbers in this widely circulated e-mail actually underestimate the comparison slightly. But then, a billion here and a billion there ... you know.
But if you think a billion is hard to imagine, what about a trillion:
Imagine a TRILLION
A trillion dollars almost defies comprehension when compared to a billion. Yes, it is three more zeroes. That is $1 trillion is 1,000,000,000,000.
But that's little help, even though we talk trillions every day. We say it casually, as in "the Iraq/Afghanistan wars will cost a trillion dollars" or "we'll have a trillion-dollar budget deficit this year."
To get some perspective, look up at the heavens on a clear night. It's estimated that there are between 100 billion and 400 billion stars in the Milky Way. If you go to Ask.com and ask how much is a trillion, you'll get some fascinating comparisons, and all of them will leave you overwhelmed.
And yet, this year America's government will spend $1,000,000,000,000 more than it will take in through taxes.
It all adds up
In the days of Dirksen, the 1960s, Congress might have been excused for its then-legendary spending by the fact that they didn't even have pocket calculators to measure the impact on every current and future taxpayer. We have no such excuse.
So the next time you hear the word "billion" being spent, whether it comes to taxes or government spending, use your calculator (on your smartphone, or laptop, or the Internet) to figure out your share.
You can divide it by the number of tax returns filed in the latest year: 142 million.
Or perhaps it's more correct to use only the number of tax returns that showed an income tax obligation. Last year, 51.6 million returns filed had no tax obligation -- paid zero in income taxes.
So perhaps you should divide the next billion dollars Congress spends by the remaining nearly 90 million returns.
That means, every time Congress spends $1 billion, if divided equally, each of those 90 million tax-paying tax returns would owe an additional $11. That doesn't sound so bad, except that the government is spending billions and billions.
Well, we could borrow the money. Or we could print the money. As long as the rest of the world lets us get away with it.
As Dirksen said, a billion here, and a billion there. So I leave you with one more famous Dirksen story:
"I remember the man who was on the wrong floor of the hospital in Peoria. He was on the floor where the baby ward was. There were little tykes squalling and bawling. The nurse came out. She had a long, dour countenance. When she got close to him, the fellow said, 'Nurse, what makes all those little brats squall and bawl the way they do?'
"The nurse remembered that the portion of the national debt for the baby was about $1,971, and she said, 'Well, mister, if you were out of work, if you owed $1,971 as your share of the debt, and if your pants were wet, you would squall too.' "
Only today, if you really want to cry, each baby born immediately owes $43,580 -- a baby's share of our acknowledged $13.5 trillion national debt. And that's The Savage Truth.
Terry Savage is a registered investment adviser.