The troubling state of the American economy is keeping millions of people up at night and the unprecedented, irresponsible, and “‘no end in sight” government debt binge is largely to blame for much of the anxiety and angst. That, and the seemingly endless tales of rampant waste, fraud, and mismanagement. Every election cycle candidates promise to get spending under control, cut the debt, and “clean up” Washington, yet there remains seemingly countless numbers of GAO reports detailing the billions squandered every year, decade after decade.
1 + 1 = 2. However, does 2 + 2 = 4 — or more?
“A billion here, a billion there, pretty soon you’re talking about real money.” Everett M. Dirksen, longtime Senator from Illinois, may have uttered those words back in the 1960s (although the jury is still out on whether he actually said verbatim what has been attributed to him).
Most of us hear the term “billion” so often these days we rarely stop to consider the scale a dollar figure of that magnitude represents. But start adding a billion to another and then to another and pretty soon you are talking about a lot of money — cash that is unfortunately leaving the pockets of Americans and finding its way into the numerous opaque acts of government mismanagement and waste.
So what does a billion dollars mean to you? For a lot of people it implies yachts, private jets, and other items of indescribable luxury. To Sen. Dirksen, it was a simply a unit of measure for gauging what he perceived as the troubling, ever growing problem of government spending and waste.
The crazy arithmetic of budgetary waste
There’s no doubt that big government spending has gotten out of hand, but the arithmetic of budgetary misuse has gotten even crazier. Sen. Dirksen’s quote may have caused a few of us pause the first time we heard it; however, what he was trying to call attention to back during the 1960s is nothing compared to the largesse of today.
For just a moment, let’s try to get a better grasp of the enormity of the kind of money we’re talking about here. For this exercise we’ll assume that each second of time is equal to one dollar. This is easy — just a few key strokes on your cell phone calculator and you’ll find it takes about eleven and a half days to add up to one million seconds.
Yet a million is nothing like a billion.
At the same rate of one dollar per second the math reveals it would take almost 32 years to add up to a billion dollars, the kind of money Sen. Dirksen was talking about. However, the Congress of the 1960’s were mere wastrels compared to the big spenders running around in Washington these days.
Because a billion is nothing like a trillion.
Once again, do the math and you’ll find it takes almost 32 thousand years to add up to one trillion seconds. Amazing right? The point here is simple: In dollar terms, the kind of money we are talking about is an absolutely staggering amount — and it’s very real.
So who’s really looking out for the American citizen?
For decades, Congress and the Fed have stoked the furnace of economic growth and employment through the creation of new debt dollars, but the marriage of monetary policymaking and budgetary decision-making has been disastrous at best. Counterproductive policies have given rise to programs, personnel and a bureaucratic culture that has asserted prime control and influence over some of the biggest life items that retirees care about most: health care, benefits, security and personal safety. Mismanagement has created enormous holes in federal and state budgets, but also — figuratively — deep holes along the retirement path for a generation of retirees.
Nobody made this point more poignantly than Sen. Dirksen when he penned the word “pothole” in his notes to remind himself to tell the following story in a speech during a debate over raising the debt ceiling:
“As I think of this bill, and the fact that the more progress we make the deeper we go into the hole, I am reminded of a group of men who were working on a street. They had dug quite a number of holes. When they got through, they failed to puddle or tamp the earth when it was returned to the hole, and they had a nice little mound, which was quite a traffic hazard.
“Not knowing what to do with it, they sat down on the curb and had a conference. After a while, one of the fellows snapped his fingers and said, ‘I have it. I know how we will get rid of that overriding earth and remove the hazard. We will just dig the hole deeper.'” [Congressional Record, June 16, 1965, p. 13884].
Years of budgetary malfeasance and inept policymaking have resulted in hundreds of billions of dollars in waste, cash no longer available to help improve the nation’s infrastructure, reduce taxes or fund the Social Security, Medicaid, and Medicare programs. Millions of citizens are feeling the pain — but retirees are more acutely aware of the on-going and expanding debt problem than any other age group.
In the half century since Dirksen’s words echoed through the senate chamber little has changed in Washington except for the magnitude of the amount of wasted money. So, if there’s any one thing we’ve learned about our government — beyond them being terrible financial stewards, it’s that they’re also exceptionally good at kicking the can down the road and indebting future generations.
To protect yourself, preserve your life savings, and avoid the budgetary black hole, you should begin now by getting yourself up to speed with your retirement planning. You can’t control Congress or the central bank, but you can control your own decision-making, and there’s no better time than right now to start taking matters back into your own hands.
Be smart, be rational, but definitely take action.