Millions and Billions: a rule of thumb

I've posted a bit about this before, but I'd like your feedback and ideas about it - is this a good estimate for what the "mean" household might pay? What about the median household?

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How much does a $10 million dollar program cost you? Should you be upset that the Pentagon has "misplaced" billions of our dollars? (Maybe they should look under the couch cushions). I've always been amazed that the media provides no useful context for the money numbers they bandy about when discussing policy - nothing to hold it to the real world. I've tried to come up with my own rule of thumb, but I'd be interested in hearing your thoughts on it, (my numbers are probably full of holes) Or finding out what your rule of thumb is, if you have one.

Anyway, so here is my rule of thumb. I start with the assumption that there are ~275 million americans, and that there are roughly 2.75 people per taxpaying household in the US. Therefore, there are about 100 million taxpaying households in the US. Therefore, each million that something costs the feds costs each household about an average of one cent. So, I reason, and realizing it is just averages, a million dollar government program costs me one penny. A 100 million dollar a year program costs me a dollar a year. A billion dollar program costs me $10 - and now you are starting to catch my cheapskate attention.

Bush, the anti-Robin Hood, says his latest lavish give away to the super rich will cost on the order of $675 billion dollars over 10 years. The government will therefore need to take about 7,000 of my dollars over that time to make up the shortfall. Or it could go into deficit spending (and I will have to pay that much, plus interest, later). Or it could cut back its spending. None of these options is attractive or makes any sense. Will the media lay it out this way? No.

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Does this help put into perspective when it is reported that $9B has been "misplaced" in Iraq? That means that Halliburton, Bectel, etc. have taken about $90 from every single household in the US. When they rail on about the "millions" spent on the National Endowment for the Arts or PBS, does it help to realize that it is just pennies out of your paycheck?

On edit, fixed link

to better understand the issue of money and the gov. Thanks, it's a valid perspective and I appreciate the understanding you illustrate.

So, I found a graphic which actually shows a bit about income distribution, government revenues, and total taxes.



From a NYT article which is offline now, but commented on here.

I think, if I'm reading it correctly, it doesn't include corporate taxes, tariffs, etc. But we can take this as an approximation of the tax burden for individuals.

If you compare the contributions of each quintile with their expected "average" contribution (20%), you see that households in the lowest fifth pay about 1/5th of my overall estimate, or about $2 for every billion the government spends.

The second 20% pays about 1/3rd of my estimate, or about $3.4 for every billion spent.

The middle 20% pays about 2/3rd of my estimate, or about $6.8 for every billion spent.

A household in the fourth quintile pays about $12 for every billion spent.

A household in the highest income bracket pays about $26 for every billion spent. So that means the Pentagon and its various contractors have "lost" about $234 of tax money from people in those brackets, not $90.