Is a Trillion Enough?

Is an economic stimulus of about a trillion dollars enough? No, says Paul Krugman, last year's winner of the Nobel Prize in Economics. Here's how to think about a trillion dollars. For starters, it looks like this expressed as a dollar number.

$1,000,000,000,000

It's a big number. Too big to comprehend, really. So here is how you can put it in context. Below is a list of six major, and notable, U.S. expenditures from the past. The cost for each is expressed in 2008 dollars.

• World War II - 16 million troops; 4 years - $4 trillion
• Interstate Highway System - 35 years of construction - $800 billion
• New Deal - public expenditures during the Great Depression - $500 billion
• Space Program - Projects Mercury through Apollo (Moon landings) - $140 billion
• Panama Canal - construction cost; opened in 1914 - $7 billion
• Louisiana Purchase - 1803 - $261 million

But it's not enough to convert costs to 2008 dollars. Economists also look at how the expenditures compare to GDP (Gross Domestic Product - the total market value of goods and services produced each year). When viewed this way, the above expenditures are much, much higher. The cost of World War II, for example, equates to $17 trillion when taking GDP into account. The Louisiana Purchase, which looks relatively inexpensive in 2008 dollars, actually equates to over $400 billion when viewed in the context of its share of GDP.

So, Mr. Krugman may have had a case when he recently wrote in The New York Times that President-elect Obama's "...prescription doesn't live up to his diagnosis. The economic plan he's offering isn't as strong as his language about the economic threat. In fact, it falls well short of what's needed."

Perhaps so. We'll have to see. In the meantime, we'll all have to get used to thinking about what a trillion dollars looks like.

Quik Vue: Here are more ideas for how to think about a trillion dollars.

Sources for this post include The New York Times, Plain Dealer and Wall Street Journal.