It's a new year, meaning that while Americans are working out what their taxes are, a plethora of government offices are busy trying to make estimates of budget figures for both 2010 and 2011. One figure, however, already stands out from the crowd based on its sheer magnitude. The figure was released last Wednesday from the Congressional Budget Office, which now estimates that the 2010 budget deficit is a whopping $1.5 trillion.
One and a half trillion dollars! That's a lot of money! I'd wager most can't even imagine that much money, which is probably why various commentators have resorted to conceptualizing the deficit with silly calculations about how many times the sum could wrap around the Earth, how many miles it could stretch into space or how many years it would take to print the necessary bills on an old-fashioned printing press.
It has to be more difficult to try to imagine (and calculate) how long it would take to drive 1,200 miles on a road paved with $100 bills that's how far $1.5 trillion would get you, in case you were wondering than to just think about the context of these numbers. Why try to visualize the quantity of individual bills in $1.5 trillion when it would be far more instructive to simply compare these figures to other current and historical figures? We engage in comparison every day to understand the value of more familiar numbers for example, we know that the prices at restaurants in Hanover are high because we compare them to other restaurants.
Continuing with the CBO example further illuminates the importance of putting numbers in context. The media is abuzz with news of the deficit and the impressive $1.5 trillion figure has made it into more than a couple of headlines. The hype is driven largely by the fact that if this estimate pans out, it will be the largest budget deficit in America's history. That's impressive, until you consider that the budget deficit in 2009 was a close runner up: $1.4 trillion. $1.5 trillion no longer seems like a huge jump. Just by introducing one other point of reference, we can turn these incomprehensible numbers into something ordinary.
I understand that sometimes the media need to exaggerate the magnitude of some stories to attract readers. What is truly upsetting about the CBO case is that news outlets shouldn't have to resort to scaring readers with big numbers when there is actually real news to report. What's newsworthy is not the current estimate of the budget deficit, but rather that the CBO's estimate actually increased by about $414 billion ($0.414 trillion) since August 2010. That's a 38 percent increase in a matter of four to five months, which is particularly troublesome in a fiscal year when many hoped the budget deficit would begin declining back to pre-recession levels (when the deficit used to hover around $200 billion). Sadly though, this $414 billion figure appears in only a few of the reports that I have read.
Enough with the CBO and the media let's look to politics for another example of how the absence of context can influence our perceptions of large figures. Also on Wednesday, the House voted to eliminate the Presidential Election Campaign Fund, which uses $3 from the federal taxes of taxpayers who choose to opt into the fund to help provide public support for elections. Many involved are lauding the vote as the first in a series of major budget cuts, as it's estimated that eliminating the fund will save the government $617 million over the next 10 years. I would draw your attention to the word "million" there. Approximating that the savings are distributed evenly among the 10 years represented, this vote reduces the yearly budget deficit by a mere 0.00411 percent. The Republican Party is going to have to do a little better than this if it wants to impress me.
Of course, let's not forget that when President Barack Obama first took office in 2009, he promised to make a whopping $100 million in budget cuts in his first 90 days. Exaggerating the value of numbers isn't a partisan issue.
The bottom line is that if Americans want to stay informed about which budget numbers warrant fear or awe and which are mere publicity stunts, it's going to require a little research and calculation. Given how many protests I observed in 2010 against "big government" and government spending, I hope to see the same level of scrutiny applied with the newly elected officials in 2011. Knowing the context is the difference between a mountain and a molehill.
