Oh boy, the economy is still bad. News out recently from The Washington Post (1) say “revised estimates show the budget deficit topping $1.4 trillion this year.” The BP Oil spill and cleanup is still making headlines; anchors on CNBC appeared to have indigestion; (anecdotally the new CNBC Power Lunch set seems smaller; wonder if that’s from the deficit) and the economy is still trudging along. Mere anarchy is loosed upon the world. Still, all this talk of numbers got me thinking about numbers: trillion. That’s a lot. Trillion. What is a trillion? How does it fall in terms of where we’re at in America right now?
What is a Trillion: What is a trillion: The first question to answer is just what is a trillion? Math guy Jim Loy (2) breaks it down for us. “The system used in the U.S. is not as logical as that used in other countries (like Great Britain, France, and Germany). In these other countries, a billion (bi meaning two) has twice as many zeros as a million, and a trillion (tri meaning three) has three times as many zeros as a million. But the scientific community seems to use the American system.” ‘The American system,’ is to only up it three zeros from a million to a billion and three more zeros from a billion to a trillion. In other places around the world a trillion would be 18 zeros; three times as many as a million. Got that? So a trillion is “a million million.” Twelve zeros.
What is a Trillion: Gross Domestic Product: According to Google Public Data (3), in 2008 the gross domestic product of the world was $61.1 trillion dollars (adjusted for current US dollars; not adjusted for inflation). In 2008 the gross domestic product for the United States was $14.6 trillion dollars. So our projected deficit is now virtually one tenth of our annual gross domestic product two short years ago. That’s not good.
What is a Trillion: Where Do We Go: While the projected $1.4 trillion dollar deficit is bad and things in the economy are by some accounts anemic, the fact remains that we’ve still got to keep going. That’s our only option. While folks may not be seeing things in such broad terms and they may not feel that this budget deficit affects them, in fact, it does. Even if you’re not an active investor in the markets, the markets affect everyone. We hear all the time; “America’s a capitalist nation.” We can’t do anything about that; America’s where we live.
What is a Trillion: What’s Happening Now: People remember history differently; in 1999, when the stock markets were flying high and everyone had jobs, the federal budget deficit was ostensibly zero. According to factcheck.org (4) this was due to Bill Clinton’s tax increases he pushed through during his first years in office. That’s exactly what Barack Obama wants to do; tax the wealthy and borrow for programs like extended unemployment benefits. The big difference here is that we’re exiting a recession. Stocks are not flying high, people are not working, and even if Barack Obama wants to give money away to the non-working and cut taxes on the lower and middle class, the sentiment is so different now that these actions aren’t likely to have the same effect. Rather than spend this money, put money back into the system, and generate tax revenue, people are more likely to squirrel this money away and pay down outstanding debts which have accumulated through this long period of unemployment.
What is a trillion? It’s what our deficit is going to be next year. One point four trillion dollars. According to the US Census information, there were 307,006,550 people counted in 2009. At one point four trillion that would mean each individuals contribution to this debt would be $4560.16. If every man, woman, and child in America were to magically come up with $4560.16 right away at the same time, we could pay our debt down. But I don’t know too many infants who have access to that kind of expendable coin. My 82 year old grandfather (who is very well off, coincidently) just bought three pounds of spare ribs for four dollars from the grocery store.
“Do you want some ribs?” he asked me.
“I’m not really a rib-guy grandpa.”
“Yeah,” he said, “neither am I. But the deal I got on these ribs!”
My grandfather grew up during the Great Depression. My grandfather knows what a trillion is. He also knows what four dollar ribs is too. Batten down the hatches, everyone; there appears to be some stormy weather ahead.