I have often gone after the media on printing large numbers that are meaningless to almost all their readers. The point is that when you throw out numbers in the millions, billions and trillions, very few readers have any idea what these numbers mean. It is possible to make them meaningful by simply adding some context, such as expressing them relative to the size of the economy or as a per-person amount.
I actually got Margaret Sullivan, then the New York Times public editor, to completely agree with me on this point. In her column, she also enlisted the enthusiastic agreement of then Washington editor David Leonhardt. But then nothing changed.
We see the fruits of this failure in a New York Times article (2/22/20) that compares the tax and spending plans of the leading Democratic contenders. It gives a true orgy of really big numbers, in the form of trillions of dollars of additional taxes and spending, providing readers with no context that would let them know how much impact these taxes are likely to have on the economy and/or their pocketbooks.
We are told that:
Even Mr. Bloomberg, a billionaire himself, would raise taxes on the rich and corporations by an estimated $5 trillion, which is about 50% more than Mr. Biden would.
A bit later we get:
Mr. Sanders’ policy agenda is by far the most expensive of the leading candidates, though estimates vary. The cost of his policy plans on just a handful of topics — healthcare, higher education, housing and climate change—could exceed $50 trillion over ten years. By contrast, the federal government is currently projected to spend roughly $60 trillion over the next decade. [Total federal spending is some context.]
…In addition to a Medicare for All program that would require an estimated $20.5 trillion in new federal spending over ten years, Ms. Warren’s proposals include a sweeping set of new programs addressing areas like Social Security, climate change, higher education, K–12 schools and housing. Taken together, those proposals and her Medicare for All plan have an estimated 10-year price tag of more than $30 trillion.
Since most readers probably don’t have a very good idea of how much money $30 trillion would be over the next decade, a useful starting point might be the projected size of the economy. The Congressional Budget Office puts GDP over this ten-year period at roughly $280 trillion. That means $30 trillion in additional taxes and spending would be a bit less than 11% of projected GDP. Mr. Bloomberg’s projected $5 trillion in taxes would by roughly 1.8% of projected GDP.
To get a bit more context, the tax take projected for 2020 is 16.4% of GDP. By contrast in the late 1990s boom, tax revenue was over 19% of GDP, peaking at 20% in 2000. This means that Bloomberg’s proposed increase in taxes would still leave us with revenues that are far smaller as a share of GDP than what we paid in the late 1990s.
The proposals from Warren and Sanders would raise above the late 1990s level, but perhaps by less than the really big numbers in this piece might lead readers to believe. If we increased taxes by 11% of GDP, it would raise them to a bit more than 27% of GDP, roughly 7 percentage points about the 2000 peak.
The Sanders proposals would imply an increase in taxes of roughly 18 percentage points of GDP, putting us at a bit over 34% of GDP. That is considerably more than the 2000 peak, but still much lower than in most other wealthy countries. (To get a full comparison, we have to add in state and local taxes. This is difficult to do, since many of Sanders’ proposed federal expenditures [e.g. Medicare for All] would in part replace spending currently being undertaken by state and local governments.)
These proposals can certainly be discussed in considerably more detail, but a piece like this could at least try to put the numbers in some context that would make them meaningful to readers, rather than just tossing around “trillions” like it is some sort of mantra. The reality is that the Biden/Bloomberg proposals are not terribly big deals in terms of the budget and what we have done historically. Clearly the Warren and Sanders proposals are more ambitious. Readers can decide whether they think the potential benefits are worth the cost; taking a few minutes to add a little context would give readers an idea of what is at stake.Print