The Magnitude of Numbers and the Stimulus Plan

Some people learn through words. Some people learn through pictures. Some people learn through numbers. I’m a numbers guy.

But big numbers, really big numbers, often lose their significance because we just can’t comprehend that many zeros.

And that’s what’s happening with the stimulus plan(s). They will end up being $2 trillion (that’s trillion with a T) before we’re done. The first components were the $150 billion tax rebate last spring and then the $750 billion bailout from October. In the next week or so Obama will introduce his $775 billion program and there will be more before we’re done. So let’s just say $2 trillion.How much is $2 trillion dollars? Well it would be enough to have paid for:

  • the man on the moon project, plus
  • the entire Interstate highway system, plus
  • the Vietnam War, plus
  • the first Gulf War, plus
  • the entire budget for the United Nations for the next ten years, plus
  • all the tax act historic preservation projects of the last 15 years, plus
  • the entire Gross Domestic Product of Canada

and there would still be enough left over to pay this year’s room, board and tuition for every college student in America.

So a bit of money.

Saturday President-elect Obama said that his stimulus plan would create 3.7 million jobs. It’s going to cost $775 billion. But here’s the calculation he didn’t make. That works out to around $209,000 per job created. I want one of those jobs!

Now don’t get me wrong, the stimulus plan is crucial. But let me make a small comparison. There’s already a stimulus in the US tax code. It is a tax credit for the rehabilitation of historic buildings — to “stimulate” private capital to invest in heritage resources. And like any stimulus program it has a cost — $6,873 per job created.

Let me see….a financial stimulus for $209,000 per job or one for $6,900 per job. Which is giving the taxpayer the biggest return?

Or we could put that in slightly different terms. Based on the Obama figures every $1 million spent in his stimulus plan creates around five jobs. Every million that the historic rehabilitation tax credit costs creates around 145 jobs. I’d like to say “you do the math” but I’ve already done the math.

The stimulus plan is necessary, but please understand these two things: 1) 100% of the stimulus is coming from borrowed money, and 2) if you have a child or a grandchild who is 5 years old today, they will spend their entire working life paying off this bill.

So it sure as hell better be well spent.