BILLIONS & BILLIONS: Some People would say that is real money!!

Guest Feature by Don Daake and Edward Piatt

Question: A million dollars at one time was a lot of money for a government to spend, and then it became billions and now trillions. It is just hard to understand the scope of these numbers. Do they really make any difference to me, my family and my business?

Anyone over thirty years of age will remember astronomer Carl Sagan’s famous line “billions and billions,” that only his deep baritone voice could project so effectively. Even if you did not really know what a billion galaxies were, he convinced you it was something really big.

For those a little older, you’ll remember Illinois Senator Everett Dirksen’s stunning line “A billion here and a billion there and pretty soon you are talking about real money!” While it was attributed to him, no one seems to be able to track down an exact reference. Nevertheless the point is so appropriate today.

The astounding numbers we hear out of Washington and Springfield represent exponential spending growth. Whether you support big or small government, almost everyone agrees that things have gotten out of control. It has gone way beyond partisan politics!

That being said, we have been hearing for years that if large deficit spending continues, our financial house will come crashing down. We have billions of dollars of trade deficits, budget deficits, and a growing federal debt now approaching $12.1 trillion. Yet somehow we seem to be able fend off the Chicken Littles of the world. Sure we have had our ups and downs, but everything has ultimately turned out okay in the past.

It will be okay because it always has been, right? Maybe not this time. Most serious economists and policy makers that we know of are really concerned.

Here-in lies a fundamental problem. Like the boy who cried wolf too many times, we have been desensitized. Desensitization is an important psychological principle that is used to help people overcome fears about flying, bugs, public speaking and even meeting new people. By gradually exposing people to what they fear, eventually they lose that fear.

Desensitization of the wrong type can also happen to us by being exposed to a message over and over again. We have heard about the evils of multi-billion dollar deficits so often it doesn’t sink in anymore. If we are ever going to take serious the massive spending problems we need to re-sensitize ourselves to the sheer size and scope of these large numbers.

Putting these large numbers into the proper context can start us towards economic rehabilitation.

How it stacks up.

A million dollars of $100 bills stacked in a pile would be about 45-50 inches tall. Only 50 inches you might ask? Well those 50 inches could buy a lot of cheeseburgers or 15-20 nicely equipped Cadillacs.

What about a billion dollars of $100 bills stacked up? The pile would be about 358 feet tall, equivalent to a 35 story building-or approximately five times higher than the Executive Center in downtown Kankakee.

While that might be interesting trivia, let’s put this in a more real world context for us. Consider the following three examples that will drive home just how much money is being spent by our federal government each year.

Building Sears Tower over and over and over again.

Even though Sears Tower is now known as Willis Tower, to most of us it will always be known as Sears Tower. If we were to ask you how many days of federal spending it would take to build a complete Sears Towers, we suspect most of you might guess 20-30 days.

With federal spending this year of $3.61 trillion, we are actually spending of $9.8 billion per DAY. The Sears (Willis) Tower today is valued at approximately $840 million. We are not talking 20-30 days of spending to build a new Tower. More than eleven Sears Towers could be built per DAY, 365 days a year or one about every two hours.

Walmart’s profits.

Chances are you have heard of little Arkansas chain store started by a fellow named Walton. Modest at first, it has become the largest retailer in the world and the largest private employer in the United Sates. Walmart is often held out as either the savior or villain of corporate America. Like many large businesses, they have their pros and cons. But detractors will bash them for their large and excessive profits. True they are the “800 Pound Gorilla” in the retail world with 2008 sales of about $379 billion dollars.

What shocks most people, though, is their profit margin on sales in a little less than 3.4 percent, not 30 to 40 or even 50 percent that many people imagine. Of even greater surprise, though, is the fact that every cent of their profits for an entire year would be consumed in less than 31 hours of federal spending!

So when you hear politicians of either party rail against excessive profits of corporate America, perhaps you ought to ask if they have ever had a course in Economics 001 — remedial economics. Our point here is not a defense of Walmart or politician bashing per se, but rather to get all of us to understand these massive numbers.

You’re in Debt! You’re in really deep.

Congress is seeking authority to raise the national debt ceiling to 12.1 trillion. If you want to see the debt growth in real time right in front of your eyes try this Web site. Really appalling!

Even if we never pay off the debt (which we won’t unless the Chinese and others say “PAY UP”), interest payments MUST always be made. Here’s the bottom-line: each of us 308 million Americans owe $39,300. If you have a family of four, you owe a cool $157,200.

For many people that is as much as their house is worth. Since the median income in Illinois for a family of four is about $81,000 you’d have to work almost a full two years to pay your family’s share. But it is really is worse than that, since your take home pay might be only 75 to 80 percent of your gross income. You’d have to work full-time for two-and-a-half years to pay your share. No food, no housing, no movies, no nothing — just working for the man, Uncle Sam.

So what’s the point of all of this? It is not to depress us, but rather to motivate us. We want to re-sensitize you!

Just like your family has to analyze its earning and spending realities, we must demand the same of our government at all levels. Remember when it’s FREE or someone else is paying (the government), it is really expensive. We must be involved in returning financial common sense to our government at all levels.

A trillion here and a trillion there — and we talking about real money!

Don Daake is a professor of business for Olivet Nazarene University. He holds a B.S. from Kansas State University, an MBA from the University of Iowa and Ph.D. from the Florida State University in Strategic Management.

Edward Piatt is a manager with over 25 years experience and is among the first students in Olivet’s first-ever doctoral program, the Doctorate of Education in ethical leadership. He holds a B.S. from Purdue University and an MBA from Governor’s State University.

This article originally appeared in The Daily Journal, Kankakee, Ill.