I think it was second grade. It might have been third. At some point we all learned about big numbers. We learned that there are thousands. A million is a thousand thousand. A billion is a thousand million. And finally (for practical purposes), a trillion is a thousand billion.

As we got older, it’s something we remembered because we’d see the numbers frequently. We all knew the difference. I could easily spend a thousand dollars. Somebody with a million dollars was rich. Somebody with a billion dollars was super rich. I didn’t know any billionaires, most of us didn’t. $1 billion was so much money that we wouldn’t even be able to spend it all. Then there were the trillions. That was a number reserved for government. Nobody was worth a trillion. No family was worth a trillion. No company was worth a trillion. In 1980, the total debt of the US government wasn’t even a trillion… although 30 years later it’s well over 10 trillion.

The point is, we know what the numbers mean. But when they’re used out of context, on purpose or not, it’s easy to miss the point.

A few recent examples of numbers out of context are AIG bonuses, bank repayments and earmarks. All three of these have made big news, but they’re really minor details.

AIG
The government has given AIG somewhere around $180 billion. The bonuses at AIG, regardless of whether they should have been given out, totaled $165 million. So 165/180 means that almost 92% of the bailout money was given out as bonuses. That seems like a misuse of taxpayer money. Something we should all be upset about. Wait… 165/180,000 means that less than .1% of the bailout money was given as bonuses. Right or wrong, .1% means that this shouldn’t be the biggest issue. Don’t worry, after weeks of media attention 9 of the top 10 AIG execs gave the bonuses back.

Bank repayments
Want a bailout? Everybody’s doing it. The government created a $700 billion bailout fund (among other bailouts). According to the Associated Press, yesterday,

“Five banks have repaid millions of dollars they received from the government’s $700 billion financial bailout pot, the Obama administration said Thursday.

The Treasury Department, which oversees the bailout program, said the banks returned a total of $353 million.”

So the banks have already repaid 50% (373/700) of the bailout plan. It looks like the government’s illegal, colossal blunder might have actually worked. No. Again, that’s 373/700,000. That means .05% of the money has been repaid. That’s not news. If I borrowed $100 from you, it’s the equivalent of me repaying you one nickel. It’s not a start, it’s not symbolic. It’s an insult as much as anything else.

Earmarks
Earmarks. Horrible, horrible earmarks. Anytime a discussion about government spending comes up, somebody undoubtedly complains about earmarks. Don’t get me wrong, I think earmarks should be cut (along with 90% of government spending), but this isn’t as big an issue as the media makes it out to be. In 2005, $27.3 billion of the $2.4 trillion (the government spends in trillions now) was spent on pork. That’s around 1.1%. In 2006, around $29 billion of the $2.66 trillion spent by government was pork. Again around 1.1%. Yes, it’s an issue. No, it’s not THE issue. It should be discussed and eliminated, but it should not be the focus of the media or the linchpin of a government spending argument.

Whether it’s AIG, bank repayments or earmarks, it’s all relative. What I mean, is that one number is relative to the next. $1 million is a big number if you compare it to $2. But it’s insignificant when you compare it to $1 trillion. The next time the media spouts some numbers and makes a huge deal out of it, think about what it relates to.