Time to change the discussion #1
This is the first of five posts on my blog on how discussion of taxes and budgets in the US needs to change to improve decision-making.
Recent political debate and the media throws around costs of millions, billions and trillions of dollars even though there is no easy way for an ordinary citizen to evaluate the meaning of these terms. All of these are very big numbers. Consider the following numbers, sorted from largest to smallest. Which ones should we be worrying about?
Sample of recent numbers in the news (or that should be there)
$16.4 trillion US National Debt [1]
$3.7 trillion Total cost of wars in Iraq, Afghanistan and Pakistan [Reuters,2]
$1.2 trillion Size of tax increases and budget cuts in the fiscal cliff [3]
$1.1 trillion Federal deficit for 2012 [4]
$849 billion What is at stake in the Bush-era tax cuts for the wealthy, those earning more than $250,000, over ten years. [ABC news,5]
$ 807 billion The US government’s estimate of the direct cost of the war in Iraq thru FY2012. [6]
$ 571 billion The US government’s estimate of the direct cost of the war in Afghanistan and Pakistan thru FY2012 [6]
$ 100 billion Cost of the Iraq war that was used in discussions just before attacking Iraq [7]
$ 1.4 billion Financial spending for all presidential candidates, 2011-2012. [8]
$ 446 million The FY2013 annual budget for the Corporation for Public Broadcasting. [9]
$192 million The cost of the 2010 Newton North High School serving half of the Newton MA population [10]
$ 83 million Campaigning expenses, all candidates including outside spending, on Elizabeth Warren vs. Scott Brown Massachusetts Senate race, 2012. [11]
$ 11 million Proposed tax override for Newton MA in 2013 to pay for schools [12]
$ 54,000 Cost of running the March special election to vote on the Newton override. [13]
The relevant populations
US population: 315 million people
MA population: 6.6 million
Newton population: 86,000 (half served by Newton North High School, the other by Newton South High School.)
Costs revisited with Ellis commentary
$ 52,000 US National Debt per Person – High, but can be reduced if we try hard.
$12,000 Total cost of wars in Iraq, Afghanistan and Pakistan per Person Not worthwhile to me, and 23% of our total US debt!
$ 3,800 Per person size of the 2013 fiscal cliff, in taxes and reduced spending.
$ 3,500 Extra cost per person per year to eliminate the federal deficit for 2012. Although similar to the preceding, note that this is for one year, while the above is over ten years… Even jumping over this cliff does not eliminate our deficit.
$ 2,700 Ten-year cost per person of the Bush-era tax cut on those earning more than $250,000. A lot is at stake here, not small change.
$ 270 Average per year cost per person of Bush-era tax cut on >$250k Doesn’t look like such a big number, and this is how much it reduces our per person annual deficit.
$13,500 Average per year cost per wealthy person (top 2%) of Bush-era tax cuts. Recall that the average income of this group is way higher than $250k
$ 2,600 The official direct cost per person of the war in Iraq. Why isn’t there more discussion of this?
$ 1,800 Cost per person of the Afghanistan war. Maybe Afghan was worthwhile, but I doubt it.
$ 317 Initial cost per person of the Iraq war used in selling it to the public. How could we have been so wrong?
$ 4 Cost per person of the US presidential campaign. Maybe higher than I wish, but it is not going to break our budgets. Plus it is all voluntary, unlike the taxes.
$ 1 Cost per person of federal funding of public TV and radio. A small portion of their total budget. Why are we talking about this at all?
$4,500 Cost per Newton resident of the Newton North High School. High, but I bet we more than made it back in increased property values. Even ignoring that more than half was funded by the state, if there are 4 people per household, then this is only 2.6% of median property value in Newton.
$ 13 Cost per Massachussetts resident of the 2012 Senate race. Seems reasonable expense for making big decisions. Plus it only happens every six years for each senate race, so only $2 per year per person.
$ 128 Cost per Newton resident per year of proposed tax override to help pay for schools. Definitely affordable.
$ .62 Per person cost of running Newton’s March special election. Should not have even made the papers. Informed decision-making costs money.
Lessons
Big cost numbers are easier to understand when expressed as a cost per person.
Some big numbers don’t look very scary. Others look worse.
The numbers that get a lot of play in the media are not necessarily the right numbers.
Thought to Ponder: Why is it that almost no one in Newton is worried about having incurred a debt for one school in the amount of $4500 per resident, while citizens, and our Congress in particular, seems paralyzed to contemplate reducing our federal debt by a similar amount?
Citations
[1] http://www.brillig.com/debt_clock/
[2] Reuter. 2012. Cost of war at least $3.7 trillion and counting. http://www.reuters.com/article/2011/06/29/us-usa-war-idUSTRE75S25320110629 based on estimates from “Cost of War at http://costofwar.com/ which is sponsored by the National Priorities Project.
[5] http://abcnews.go.com/Politics/fiscal-cliff-bush-tax-cuts-expire/story?id=17907791#.UMnzFXfgztE
[4] http://www.gpo.gov/fdsys/search/pagedetails.action?packageId=BUDGET-2012-BUD
[5] http://abcnews.go.com/Politics/fiscal-cliff-bush-tax-cuts-expire/story?id=17907791#.UMoiRnfgztE
[6] Congressional Research Service, 2011. The Cost of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11. http://www.fas.org/sgp/crs/natsec/RL33110.pdf updated continually at “Cost of War at http://costofwar.com/.
[7] Tom Russert Interview with Vice-President Dick Cheney, “NBC News’ Meet the Press,” Transcript for March 16, 2003.https://www.mtholyoke.edu/acad/intrel/bush/cheneymeetthepress.htm
[8] Center for Responsive Politics, 2012.Most Expensive Races 2012 Overview
http://www.opensecrets.org/overview/index.php and
[9] Corporation for Public Broadcasting. 2012 Fiscal Year 2013 Operating Budget. http://www.cpb.org/aboutcpb/financials/budget/
[10] Newton Tab. 2012. Newton North High School final cost $6M less than expected. http://www.wickedlocal.com/newton/news/x1334618956/Newton-North-High-School-final-cost-6M-less-than-expected#ixzz2EwkW8uLrhttp://www.wickedlocal.com/newton/news/x1334618956/Newton-North-High-School-final-cost-6M-less-than-expected#axzz2EwkHptlI
[11] Center for Responsive Politics, 2012.Most Expensive Races 2012 Overview http://www.opensecrets.org/overview/topraces.php?cycle=2012&display=allcandsout
[12] http://www.newtonma.gov/gov/executive/override.asp
[13] Newton Tab, December 12, 2012. Table showing breakdown of the various costs of the special election in March, 2013 on the override.
Very interesting stuff. I see that you noted a few instances of a situation that I always find interesting: Why are the costs of tax cuts always expressed over a 10-year period, whereas any imputed benefits (from GDP growth) of tax cuts (or any other type of stimulus) are only for the next year or two years?
Also on the thought to ponder, what’s the average wealth of a Newtonian, versus the average wealth of an American?
Good point. I think one reason is that many programs (e.g., wars) take many years, as did the Bush Tax cuts, which were phased in. So one year does not give an accurate picture.
Still it is a fair point that often people mix apples and oranges (one year flows and ten year totals).
I find it appalling that the Afghanistan war is costing us more than ten billion dollars a month and there is so little discussion of this, or willingness to cut the military budget.
Newton MA is a high income town ($56,163 per capita in 2010, $136,843 per family). [1] So paying this off is much easier in Newton than the average town. But it is also true that high income earners like Newton residents pay for much of the overall federal income taxes (and should pay more, in my opinion) so the willingness of high income people to pay off such debts is not irrelevant. The local school example would be relevant even if the numbers were half or less. But it is the unwillingness of our current government leadership to make us pay for our current consumption that is the biggest problem.
[1] http://en.wikipedia.org/wiki/List_of_Massachusetts_locations_by_per_capita_income
Interesting view of a complicated situation. When reviewing proposed tax law and regulations, I usually consider the effect on a particular person, rather than the public on a per person cost basis.
As for the high school, I doubt that we have had a commensurate increase in property value for the amount the high school has cost us. While the City no doubt needed a new high school, what we have was poorly conceived and vasly overpriced, however attractive the as-built product is.
hello, i’m so cuffed that i stumbled across your website
I will be marking this! – real estate offer form is an interest of mine and
and your “All Taxes and Budgets Should be Expressed as Dollars per Person | Randall P. Ellis” article is without doubt good work.
great stuff I’ll surely be back again soon!