The government is back open. Museums will reopen their doors, tax refund checks will resume being sent and 700,000 workers can go back to work -- with pay, even!
Now that it's over, let's make a pact: Let's not do this ever again.
Seriously, we have to stop doing this. The economy is just now really starting to recover from the Great Recession. Pointless political shutdowns are the quickest way to short-circuit that recovery and self-inflict pain.
MacroEconomic Advisors estimates the shutdown cost the economy $12 billion. S&P used a broader forecasting model and estimates the 16-day shutdown cost the economy $24 billion, or about $1 million per minute. Since 2009, MacroEconomic Advisors estimates "fiscal uncertainty" -- debt-ceiling fights, shutdowns, threats of default, etc. -- have cost the economy $150 billion in lost output and 900,000 jobs. Last week, Gallup's Economic Confidence index suffered the largest drop since 2008.
The need to tackle the nation's long-term deficit is real. But there's a term in economics called "false economy" that refers to short-term attempts to save money backfiring and costing more in the long run. Groups of Americans have spent the better part of four years outraged at the cost of say, PBS and NPR's $450 million annual budget. But the shutdown cost the economy that much every eight hours. Surveys continuously show Americans are outraged at how much the government spends on foreign aid. But the actual amount spent on foreign aid -- about $56 billion a year -- has been dwarfed by the amount of money sucked out of the economy by four years of political pranks.
And there are two dirty little secrets about the economy that were left mostly unspoken over the last two weeks of fighting.
One, the annual budget deficit as a share of GDP has plunged by more than 60 percent since 2009. Debt as a share of GDP is already on track to decline over the coming decade. Non-defense discretionary spending as a share of GDP is near a half-century low. None of this seems to change the rhetoric around talks of "runaway spending" and "exploding deficits." As Ian Shepherdson, chief economist at Pantheon Macroeconomics wrote, "We are baffled by the idea that the pace of deficit reduction needs to be increased, given how rapidly the picture is improving already."
Two, growth in annual health care spending is near a 50-year low. The decline is persistent and can't be explained by a slow economy alone. And it's so large that the Congressional Budget Office is slashing its estimates of future entitlement spending. "The slowdown in health care cost growth has been sufficiently broad and persistent to persuade us to make significant downward revisions to our projections of federal health care spending," CBO director Doug Elmendorf said last month. Estimated spending on Medicare and Medicaid in the year 2020 was recently revised down by more than $200 billion. I didn't hear anyone mention this during the shutdown when worrying about runaway entitlement spending.
America has problems, but there's a tried-and-true way to deal with them: Win elections and pass laws. And more important, rely on facts. The more we govern by shutdown, standoff, threatening to default on national debt and imaginary boogeymen, the harder it's going to be to keep our fragile economic recovery afloat. Let's not do this ever again.
When Will the World Meet Its First Trillionaire?
One trillion is huge. It's so hard to comprehend that 79 percent of Americans don't know how many millions are in a trillion. (It's one million times one million.)
But Credit Suisse's annual Global Wealth Report reported something astounding this week: "Two generations ahead, future extrapolation of current wealth growth rates yields almost a billion millionaires, equivalent to 20 percent of the total adult population. If this scenario unfolds, then billionaires will be commonplace, and there is likely to be a few trillionaires, too -- eleven according to our best estimate."
Eleven people worth a trillion dollars. Each.
Crazy, right? It might even sound implausible without hyperinflation.
But look at past trends of billionaire growth, and it makes sense.
J. Paul Getty was widely believed to be the richest man in the world when he died in 1976, worth about $2 billion. Today, Bill Gates is the world's richest citizen, worth $73 billion.
So, in the 37 years from 1976 to 2013, the wealth of the world's richest person grew 36.5-times over, or 10.2 percent per year.
If the world's richest person grows his wealth at that same growth rate for the next 37 years, how much will he be worth?
At a 10.2-percent growth rate, it'll take just under 27 years for the world's richest person to grow her bank account from $73 billion to $1 trillion. (Mind you, the world's richest person decades from now very likely won't be the same person it is today.)
Even if you assume 3-percent annual inflation, continuing past growth rates would create the world's first inflation-adjusted trillionaire in 39 years. To put that in perspective, the entire gross domestic product of the United States was less than $1 trillion, adjusted for inflation, as recently as 1935.
John D. Rockefeller, the richest American ever, saw his wealth peak in 1913 at around $900 million, or 2.5 percent of the country's GDP that year, according to biographer Ron Chernow. If today's economy grows by 2 percent for the next 39 years, the world's first trillionaire would be worth about 3 percent of GDP.
Keep it all in perspective, though. In 1957, Fortune magazine asked Getty about his wealth. "Remember, a billion dollars isn't worth what it used to be," he said.
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