Michael Steele’s Bad Math

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One unfortunate aspect of human psychology is that people aren’t good at understanding magnitudes that are far outside the range of ordinary experience. Everyone’s very clear on the fact that 50 eggs is a lot more eggs than seven eggs. But the difference between a $50,000,000 budget item and a $7,000,000 budget item tends to get fuzzy. And it gets worse when you start using words in place of numerals. $5 billion is a lot more than $5 million—$4,995,000,000 more to be exact—but the two words sound similar and look similar on the page. Which brings us to things like this bit of rounding by Michael Steele:

When families keep the money, they spend it, save it, or invest it. And the private sector economy benefits when families and businesses buy consumer goods or invest it for the future. But when Washington spends the money, some of it may flow into the economy, but all too often, much gets wasted.

Democrats in Congress want a one-trillion dollar spending bill. You’ve heard about the pork-barrel programs they want to fund… 45 million dollars for ATV trails and removal of fish passage barriers is one that caught my eye. Exactly what is a fish passage barrier and why does it cost 45 million dollars to stimulate the economy with it?

There are about a million things wrong with this argument (to be saved for future posts) but just note that there’s a big difference between rounding 85 cents up to one dollar and rounding $850 billion up to $1 trillion. Nobody would call a candy bar that costs $1 a “$150 billion candy bar.” And yet $1 is, in absolute terms, closer to $150 billion than $850 billion is to $1 trillion. Of course that comparison isn’t entirely fair, the percentage difference matters as well. But the fact remains that when you’re dealing with very large magnitudes, these kind of decisions to round up or down—especially when the decision is made to add rhetorical force to the point—can wind up obscuring huge actual quantities. It’s true that if you round the recovery package’s cost to the nearest number you can express with one numeral followed by a word that it’s a “$1 trillion” plan. But it actually costs much less than $1 trillion.

Meanwhile, it’s worth saying that to call it a “one-trillion dollar spending bill” is just a flat-out lie. There are hundreds of billions of dollars worth of tax cuts in the package. Some of them are there for good reason, others we’d do better to do away with. But either way, they’re there. Anyone who’s calling the bill a pure spending package is lying.