So how much is $1 Trillion anyway?
There is much being written about the Congressional tax plan. A fairly common estimate is that the proposed tax plan will cost approximately $1.5 Trillion over the course of a decade. Currently, the total US national debt is estimated to be roughly $20.6 Trillion.
I'm not an economist. I'm also not a politician or a policy wonk. I'm not going to expound on the details of the tax plan. What I'd like to focus on is helping to understand how much money $1 Trillion really is.
What I do know is that when numbers get really large, they seem to become divorced from reality. It is really hard for many people to comprehend large numbers unless the numbers can be put into some sort of context in which the numbers can be made more real.
Here's a brief breakdown of how $1 Trillion plays out spread out over time. Since this is Christmas week, let's put it in a holiday-themed context.
Suppose that in addition to gold, frankincense, and myrrh, the Three Kings brought $1 Trillion to the manger. Being socially-minded parents, Mary and Joseph decided to distribute $1 Million to the poor and needy every day until the money was exhausted.
Now we're going to make a couple assumptions to keep the math easy. We're going to ignore the date upon which Epiphany occurred relative to the start of the year, and we're going to ignore the calendar shift which occurred when Pope Gregory the Great ordered the calendar adjusted to match the astronomical calculations (its where we got leap year from). We'll use 365.25 days per year to approximate the leap year adjustments. We'll assume that the daily distributions of $1 Million started on January 1 in the year 1 and continued until the original $1 Trillion was exhausted. We'll also assume that no interest has been earned or paid on the principal.
No surprise that the money would have outlasted Mary and Joseph. But by how much? That is, how long would it take to exhaust $1 Trillion by distributing $1 Million per day?
Turns out, it takes a really long time. The distributions would still be happening today.
At the end of 2017, there will have been approximately 736,709.25 days since 1/1/1 (that's 2017 years * 365.25 days). At $1 Million per day, a total of $736,709,250,000. That's only $736.7 Billion. There would still be $263,290,750,000 remaining to be distributed ($1,000,000,000,000 - $263,290,750,000). At $1 Million per day, it would take 263,290.75 ($263,290,750,000 / 1,000,000) days to distribute the remainder. That is, the distributions would continue for another 720.85 years (263,290.75 / 365.25).
When the original $1 Trillion is finally exhausted, it would be sometime in the year 2737. That's a very long time.
Hopefully, this thought exercise helps put into perspective the size and scope of the proposed tax reform plan as well as the total national debt.