by Ryan Schenk on November 12, 2009
I recently read an article on CNN about a little-known law that allows the US federal government to accept contributions to pay down the country’s debt.
The article contains several quotes from random passers-by in New York City, who were asked if they would consider donating. One person said the following:
“I think I could give $10 to $20. And if everyone could do that it would make a good dent in the debt.”
This person clearly does not understand orders of magnitude; if everyone could give $10-$20, we would make a dent the size of four-hundredths of one percent in the national debt.
To give a better understanding of the numbers involved, I have created the following four graphics, showing exactly how much of a “dent” a personal contribution of $15, $100, $1000, and $10,000 from every US citizen would make in the National Deficit.
If you would like the raw data, these graphics were generated from this Google Spreadsheet.
Of course it’s really not that simple. The more astute of you will notice a fallacy in the above graphics. You see, donations to the federal government are tax deductible. If I donate $10,000 to the national debt today, that lowers my taxable income by $10,000, which in turn lowers my tax burden thus skewing the numbers in the graphics above.
If anyone out there would like to add some tax functions into my Google Spreadsheet, we could avoid this fallacy of overlooking secondary consequences! Somebody get on that!