In the News

The Problem With Big Numbers

08/17/2020
Arkansas Business

Stop me if you’ve heard me say this before: The problem with big numbers is they lack natural context.

We all have enough life experience to appreciate the difference between a $10 meal and a $50 meal or between a $20,000 car and a $50,000 car. But when numbers get big and a natural context is lacking, even accurate numbers become meaningless.

This is a problem for me, as an editor, and for my reporting staff since big numbers are such an integral part of reporting on business. A reporter once added a stray zero to the size of a new office building, and instead of 80,000 SF it was 800,000 SF — the size of a mall. Why wasn’t that spotted in two rounds of editing and subsequent proofreading? Because, for most of us, building size like that lacks natural context. Same with big dollars. Would a new hospital cost $240 million or $420 million? Are you sure?

Last week in this space, I referred to 2,750 pounds of explosives in Beirut; it should have been tons.

Even small numbers can be hard to process if there are too many of them. That’s why we try constantly to find ways to use enough numbers to provide context and to avoid getting bogged down in numbers if they aren’t absolutely vital.

The inability to grasp big numbers is also a problem for the general public. For instance, a random dude on Facebook said Congress wouldn’t necessarily have to borrow money for additional pandemic relief, whether it is the $1 trillion Republicans favor or the $3 trillion Democrats want to spend.

“There has to be money somewhere that can be moved,” Random Dude stated with the kind of certainty that is oh-so-common on social media.

Uh, no. There isn’t. The idea that Congress is somehow frittering away the kind of money needed to keep our $21.5 billion economy from collapsing just underscores how unimaginably big a trillion is. (That should be $21.5 trillion. Did you notice? Or did you read right over it? Welcome to my nightmare.)

That’s not to say that there is no waste in government; wherever there are human beings, there will be waste, fraud and abuse. And there are always spending priorities we could quibble over — just like in your business, your church and your household.

Some years back, U.S. Rep. French Hill revived the “Golden Fleece Award” that U.S. Sen. William Proxmire, D-Wis., created back in the ’70s to call attention to wasteful government spending. Sometimes Hill identifies a few million dollars, like the value of hundreds of laptop computers that hadn’t been inventoried properly. Sometimes he calls out enormous systemic problems, like $2 billion a year in Social Security Disability Insurance overpayments.

But even $2 billion — an egregious waste — is a rounding error compared with $1 trillion. A trillion dollars is almost a quarter of all the money spent by the federal government in fiscal 2019.

While the feds spent $4.4 trillion last year, according to the Congressional Budget Office, it only brought in about $3.5 trillion. So we — through our elected representatives in Congress — borrowed $984 billion in the fiscal year that ended in September 2019, more than 20% of the annual cost of our government. (And we were planning to borrow more than $1 trillion in the current fiscal year, even before we had ever heard of COVID-19, because that’s how we roll.)

Most of the $4.4 trillion we spent in FY2019 was mandatory spending — Social Security, Medicare, pensions, unemployment insurance, etc. All that spending will be mandatory until Congress enacts different laws, which, as you may have noticed, is not something Congress manages to do very often.

Another major expense that must be paid is the interest on the national debt, which is the accumulation of all those annual deficits. The interest we paid last year was $375 billion; the national debt as of Sept. 30 was $22.7 trillion. Yes, more than a year’s GDP, even before the pandemic. And as of last week, with the planned and unplanned deficit spending done this year, it was $26.6 trillion. That will mean more interest costs, naturally.

Only $1.3 trillion of the $4.4 trillion spent last year was discretionary spending, and more than half of that, $676 billion, went to military spending. That’s right: Because Congress refuses to tax enough to cover what it spends, last year we borrowed more than the entire cost of our military, which is the single largest expense other than Social Security (which, for the time being, pays for itself).

Everything else that the government spends money on cost $661 billion.

So, no, Random Facebook Dude, there isn’t an extra trillion or three sloshing around in the federal budget. We’ll have to borrow it or let the economy tank even further.