Wednesday, December 03, 2008

Understanding Billions of Dollars

Jed Clampett had a problem. Representatives from the OK Oil Company were willing to pump that pesky oil out of his swamp — even pay him for it. But for some reason, they didn’t want to give him “regular” dollars. No, they wanted to pay him with some kind of new-fangled “million” dollars.

And with that, Jed learned the value of putting six zeroes after a number.

Not content with that, Washington politicians insist on putting nine zeroes after every number. Sometimes twelve. They treat “billion” (and increasingly, “trillion”) as if they were mere adjectives. The words “thousand” and “million” are tossed aside like the quarters and nickels you find under your couch cushions.

In an era where the price of a cruise missile is treated as a rounding error, it’s easy to lose perspective of exactly how much money we’re talking about. Maybe it’s easier to understand if we bring it down to a personal level.

There are about 135 million 1040 tax forms filed each year. So for argument’s sake, let’s say there are about 135 million taxpayers in the country. To get an idea of the impact of federal spending on the “average” taxpayer, simply divide the number in question by 135 million.

Here’s how it works:

One billion dollars represents about $7.41 per tax payer. That doesn’t sound like much. For example, if the government needs to build a billion-dollar bridge across a river, that bridge would cost each tax payer a little over seven dollars.

The problem is most federal projects aren’t measured in billions; they are measured in hundreds of billions. A seven hundred billion dollar bailout costs each taxpayer over five thousand dollars.

A trillion dollars costs each taxpayer almost $7500.

If given the choice, would a taxpayer be willing to spend five thousand dollars to “bail out” the economy by giving it to banks, insurance companies, and mortgage companies that have already shown poor business judgment?

Or would it be more effective to give each taxpayer five thousand dollars to invest in the economy by spending it the way that he wants to?

Or would it be better to cut out the middle-man altogether and simply reduce taxes by five thousand dollars and let each taxpayer keep the money that he earned in the first place?

Washington isn’t just broken; it’s broke, too. It’s my money that they’re spending — and yours, too. There’s no hope for sanity until we replace the ones in charge of the checkbook with people that actually understand that concept.