What you should know about 1 trillion $USD

According to the WSJ, the federal deficit reached $1.8 trillion, or 6.4% of GDP, last fiscal year, a record outside of war, recession or emergency. Musk and Trump have promised to attack it by cutting federal spending. One simple step would be to stop adding to it. And yet last week neither stood in the way of Congress’s largess. Musk posted in favor of the money for disaster victims and farmers. The vice president-elect, Ohio Sen. JD Vance, co-sponsored the Social Security expansion.

The reason is obvious: Spending is popular with voters and both parties. This is why commissions, think tanks and earnest outsiders have been papering Washington for decades with ideas to cut spending and the deficit—and mostly gotten nowhere.

Federal spending falls into three categories. First, interest on the debt, at $882 billion last year. Not much you can do about that without defaulting.

Second, discretionary spending, which gets authorized each year by Congress.

Third, mandatory spending: this is for programs that continue each year without new authorization including Social Security, Medicare, Medicaid, Affordable Care Act subsidies, food stamps, welfare, child tax credits, veterans’ benefits and pensions.

At $4.1 trillion, mandatory is more than double discretionary spending and, because of population aging and health costs, growing much faster. 

No one wants to be the grinch that stole Christmas and stop spending all that money.

Voters certainly don't want to stop receiving it.

The average cost of a dozen Grade A large eggs was $3.65 in November, up from $3.37 in October, according to data from the U.S. Bureau of Labor Statistics, retrieved from the Federal Reserve Bank of St. Louis’ FRED site.

The latest consumer price index, or CPI, shows that the price of eggs is up 37.5% from where it was a year ago. That’s in contrast to the trajectory of food prices overall, which rose just 2.4% in the past year.

If you're distressed about the price of eggs, how does spending $1 trillion dollars make you feel?

1. How Big is a Trillion?

• 1 trillion = 1,000 billion or 1,000,000 million.
• In numerical terms: 1,000,000,000,000 (12 zeros).

Comparing to smaller numbers:

• A billion is 1,000 times smaller than a trillion.
• A million is 1,000,000 times smaller than a trillion.

If you spent 1 dollar every second, it would take you more than 31,700 years to spend a trillion dollars.

2. The Global Context

• U.S. Federal Budget: The U.S. government's budget for 2024 is projected to exceed $6 trillion.
• Global GDP: The global GDP was around $100 trillion as of 2023.
• Corporate Values: Some of the world's largest companies (like Apple and Microsoft) have reached valuations approaching or exceeding a trillion-dollar market cap.

3. What Can a Trillion Dollars Buy?

Here are some examples of what could be purchased with $1 trillion:

• Space Exploration: NASA's Artemis program (the goal to return humans to the Moon) is estimated to cost around $93 billion. You could fund over 10 Artemis programs.
• U.S. National Debt: The U.S. national debt is more than $33 trillion. A trillion dollars could pay off about 3% of the debt.
• Education: The cost of free education for all college students in the U.S. for several years could be funded with a trillion dollars. There are about 125,000 students enrolled in US medical schools. The average tuition costs between $40K-90K. The US budget is $6.7 T Which of these weapons do you want to cut so your little darling can go to medical school free?
• Global Health: A trillion dollars could be used to combat global health challenges. For instance, the global fight against COVID-19 cost around $17 trillion in economic losses.

To give a perspective:

• You could give every person on Earth about $125 if you divided $1 trillion equally.

4. Historical Milestones:

• In 2000, the idea of a trillion-dollar company seemed far-off, but today Apple (along with others) has surpassed that milestone.
• U.S. national debt surpassed $1 trillion in 1981. Now, it's over $33 trillion.

5. Inflation and a Trillion Dollars

• A trillion dollars today is not what it was in the past. Due to inflation, the purchasing power of a trillion dollars has decreased over time.
• In the 1970s, the inflation-adjusted equivalent of $1 trillion would have been far higher in today's terms.

6. Tax and Economic Implications:

• Taxing the richest individuals and corporations could generate billions in revenue, but reaching a trillion dollars in revenue would require a massive overhaul of economic policies.
• Many wealthy countries have a GDP that is in the trillions (e.g., the U.S., China, Japan, Germany), but most countries' annual budgets are much smaller.

7. The Future of Trillions:

• Global Trends: As economies grow, technology advances, and inflation continues, trillion-dollar figures are becoming more common, especially in terms of market valuations and national debts.
• Digital currencies and artificial intelligence are poised to further reshape how we think about and handle such enormous sums.

Fun Fact:

If you had $1 trillion in $100 bills, it would form a stack over 631 miles tall!

Thats about the distance between Denver and Flagstaff (672 miles), if you throw in just a few more "Franklins" for the gas.

The road to hell, let alone route 66 to Flagstaff, is filled with good intentions.

Arlen Meyers, MD, MBA is the President and CEO of the Society of Physician Entrepreneurs on Substack