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Category: Fiscal Responsibility

The State of the Union: Why I’m Not Optimistic

The State of the Union: Why I’m Not Optimistic

“And after a while you’ll hear a deep voice saying, ‘Neighbor, how stands the Union?’ Then you better answer the Union stands as she stood, rock-bottomed and copper-sheathed . . . “ — Stephen Vincent Benét in The Devil and Daniel Webster

This isn’t going to be a blow-by-blow account of President Trump’s State of the Union address last week. If you didn’t see the speech, you should, so go find it somewhere and watch and listen to it. Allow plenty of time — it went on for more than an hour and 20 minutes, one of the longest ever.

To offer my own view of it, having weathered many SOTUs from a number of presidents, I thought it one of the most positive and flawless, both in terms of substance and delivery. I’m not alone in that. The CBS poll conducted after the address found 76% of viewers had a positive view of it and the CNN poll found 59% saw the speech as “very positive” and another 17% rated it somewhat positive. Only about 23% of CNN’s viewers, which normally one would judge to be mostly opposed to the President, had a negative view of the address. Still, there is a distinctly partisan subtext to these poll results. The CBS poll found that while 97% of Republican viewers and 80% of independents had a positive view of the speech, only 30% of Democratic viewers saw it as positive. Still, in the days after the SOTU, Trump’s approval rose to 50% in the Rasmussen Daily Presidential Tracking Poll, and overall his ratings stand as the highest of any President at this point in his presidency since Ronald Reagan.

All that said, if Daniel Webster confronted me at this moment and asked the question Benét attributes to him, I’m afraid that I’d fail his test. After listening to Trump and observing the reaction by the Democrats in attendance to most of what he had to say and looking toward the future, I’m not very optimistic about the actual state of the Union, and whither it is headed. This isn’t a new development for me, but, if anything, the SOTU address just deepened my less-than-optimistic view of things.

Without getting lost in the weeds of what numbers were completely correct and which ones were fudged a bit – there is evidence the President did fudge some of his figures, though my recollection is that this isn’t the first president to do so, and in terms of painting the big picture they more or less accurately did – there was plenty of positive news reported in the speech. And much of that news would, one would think, please all Americans, regardless of party leaning or affiliation. This fit with the predictions made in advance of the address, that the President would attempt to bridge partisan gaps and reach out to the nation.

Of course, judging by the reaction on the Dem side of the aisle, the partisan gap not only wasn’t bridged, few were willing to even give him credit for any of the progress the nation has made in the past two years. Last year I wrote about Democratic reaction during the SOTU in my piece Haters Are Gonna Hate. The title of that piece sums up pretty well the attitude on that side of the aisle, an assessment that hasn’t been moderated by words and actions by the Dems in the intervening year. And it wasn’t much better during this year’s SOTU.

Of course, in the November mid-terms the Dems picked up enough seats in the House to gain control of that chamber. And many of the newly elected Dems are women. They made their presence known by all wearing white to the SOTU. Joining them was Speaker of the House Nancy Pelosi — who, if you weren’t marooned on an ice flow in the Bering Sea last month, you know caused a postponement in the SOTU during the government shutdown — sitting to the rear of the President.

I confess that when Pelosi came into the chamber, my reaction was, “She’s wearing white after Labor Day?” Something one is not supposed to do. But then as all the other Democratic women filtered in also dressed in white, I realized this was done to make a statement. Apparently it was meant to honor the suffragist women who worked to secure the right of women to vote in the early part of the last century, who also wore white, but at the same time it created a very strong visual effect as television cameras scanned the audience. It could have been a positive effect, but I think much of that potential was squandered as the speech went on.

Early in his address Trump discussed how the economy had improved since he was elected, underscored by historically low unemployment rates for African-Americans, Hispanics, the handicapped, and women. More Americans are employed today than ever before in our history, he said, and even manufacturing jobs – written off by the previous administration – were coming back in significant numbers. One would think any American, even Democrats, could applaud all this. But no, the Dems sat on their hands, all the more visible amid that sea of white. This would appear mystifying, unless you recognize that this is a party that depends on a permanent underclass for its very existence. The numbers contradict Democratic claims that President Trump doesn’t care about blacks, Hispanics, women, or just about anyone else, just as they represent huge positive improvements over the numbers of the previous Obama administration. But the Dems wouldn’t give Trump credit for any of that.

Trump, following the lead of preceding presidents, had a cohort of honored guests present in the gallery, and he and his staff did a masterful job of selecting them: Veterans who had helped bring about the Allied victory in World War II; a Holocaust survivor who, as a child, was en route to extermination at Dachau when American troops liberated the death train he and his family were on; the father of a sailor killed in the terrorist attack on the USS Cole; a police officer seriously wounded during a gunman’s attack on a Pittsburgh synagogue in October; a 10-year-old girl who raised funds for St. Jude’s Children’s Research Hospital, and then won her own battle against a brain tumor; three generations of a family who lost parents, grandparents, and great-parents to a criminal illegal alien; an ICE agent who investigated and charged cases of sex trafficking and abuse among illegal aliens crossing the southern border. Even Buzz Aldrin, second man to set foot on the moon (and with whom I had opportunity to pal around with briefly back when I covered the space program), was in attendance.

It would have been pretty scandalous if the Democrats didn’t stand to applaud these guests. But there were times those in that sea of white appeared to not know how to react. They’d look at each other trying to see what others were doing. Should they stand? Should they sit? Should they applaud, or maintain silence? There sure weren’t many signs of individual initiative. And at times Speaker Pelosi gave hand signals to them, mostly indicating that they should cool their more negative responses.

At one point, later in the speech, Trump said, “No one has benefited more from our thriving economy than women, who have filled 58 percent of the newly created jobs last year.” Now this was about the strong economy and how it has benefited women, but the women-in-white took it as a queue to congratulate themselves. They jumped up and started cheering and high-fiving one another, as if the President was talking about them. Clearly taken by surprise, Trump, smiling, ad-libbed, “You weren’t supposed to do that.”

As Trump went on, noting that all Americans could be proud that we have more women in the work force than ever before, the Dem women continued to congratulate themselves as if they had anything to do with it. Trump again paused, and then added, “Don’t sit yet, you’re going to like this.” He then went on to his biggest applause line of the night: “And exactly one century after Congress passed the constitutional amendment giving women the right to vote, we also have more women serving in Congress than at any time before.” That line even brought Speaker Pelosi to her feet, and the chamber, beginning with the women-in-white, burst into a chant of “U.S.A.! U.S.A.!” It was the second one of the night, the first one breaking out earlier on the GOP side, and the President clearly wasn’t expecting it. He looked around, and then said, “That’s great. Congratulations.”

But the show of enthusiasm was brief. Just as things calmed down, Trump went on to decry the late-term abortion bills recently passed in New York and considered in Virginia, and described how these would permit what amounts to infanticide. And not one of the women-in-white was willing to show any emotion about this. What struck me was how anyone, especially a woman, would not be troubled by killing babies, as Trump put it. But the only thing the women-in-white seemed troubled by was that it was even mentioned.

As the cameras panned around the room, the looks on some Democratic faces showed nothing other than cynicism. Throughout the speech, whenever the camera focused on Senate Minority Leader Chuck Schumer, slumped down in his seat and smirking smugly, the only word that came to mind was “smarmy.” I had a similar response when the cameras panned to California Senator Kamala Harris, or Hawaii Senator Mazie Hirono. One exception was West Virginia Senator Joe Manchin, who seemed about the only Democrat willing to applaud for many of the positive things the President reported. It seemed to me that Manchin is in the wrong party, which probably also has occurred to the majority of West Virginia voters who re-elected him.

Which brings me to the crux of my concern for the state of the actual Union. In general, I can’t get too worked up over any particular politician. In theory, that’s what elections are for, and voters can vote out, or not vote in, bad apples. But it is exactly that, or they, the voters, that gets me worked up and very, very worried. Who are these voters that put people like Schumer, Harris, Hirono, and Pelosi into office? What would besiege someone to vote for the likes of an Alexandria Ocasio-Cortez or a Maxine Waters or a Richard Blumenthal?

What the Democratic Party and many of its so-called rising stars have learned is that the promise of free stuff wins votes. Free healthcare for all. Free education for all. Free income for all. Free, free, free. As a marketing professional, I know that the word “free” is one of the most powerful motivating words. It sells products. It generates responses. And it wins votes. The only problem is, when it comes to things government does, nothing is free. Sooner or later it all has to be paid for by someone, that someone being those who pay taxes. Which, on some level or other, is most of us. But then, there comes the call, by pols like Elizabeth Warren and Kamala Harris and Alexandria Ocasio-Cortez, to soak the rich (or, as Warren would do it, confiscate their wealth, the Constitution be damned). Not that even such schemes would be able to fund all the “free” stuff being promised. Not even close.

The lack of economic sense boggles the mind. And there is nothing more boggling than the “Green New Deal” resolution rolled out by the Dems a couple days after the SOTU. This piece of vote-bait was notably touted by Ocasio-Cortez, who has the economic sense of an otter (with no insult intended to otters, which are one of my favorite animals, and even otters have the sense not to get involved with things about which they don’t have a clue). This thing is so ludicrous that the Wall Street Journal’s Kimberley Strassel, who tweeted that she laughed so hard she nearly cried, said that “if a bunch of GOPers plotted to forge a fake Democratic bill showing how bonkers the party is, they could not have done a better job.”

That’s all well and good, and those among us who can see reality through the fog of fantasy, if not fraud, are likely to reject these political hucksters. But let’s not forget for even an instant that the majority of voters, as slim as that majority was, would have put Hillary Clinton in office in 2016, and it was only the Constitutional dictates of the Electoral College that prevented that. As we look around the country, we see how the tide is slowly turning. States that used to be solidly red are turning purple, even blue. And many of those Democrats elected are on the far left of the party, with enticements of free stuff flying. Despite the President’s promise in the SOTU that America would never become a socialist country, that’s a promise many on the Dem side are willing to challenge. Even in my own state, Florida, key gubernatorial and senatorial races very narrowly went to Republicans, despite a strong economy. The self-avowedly socialist Democratic gubernatorial candidate, Andrew Gillum, now facing state ethics charges, was defeated by just 32,463 votes out of more than 8.2 million cast, a mere .4% of the vote. And very small numbers of primary voters were able to get Ocasio-Cortez elected in New York, voting out a well established, but less radical, Democratic incumbent.

Meanwhile, the media, which should be a mainstay of an informed electorate but isn’t, maintains a steady anti-Trump drumbeat, with 92% of the coverage of his presidency being negative, according to an extensive study by the Media Research Institute. And they almost completely ignore – like the Dems at the SOTU – his major accomplishment, the soaring economy. After all, if you want to make people feel like victims, and you want to make them believe that you have the solutions, no matter that those solutions make no sense on the reality plane, and you have the media on your side, you have a pretty good chance of winning over voters. Just as in ancient Rome, bread and circuses play well with the populace.

That’s the formula I see the Dems applying. And, neighbor, put it all together, and that’s why I’m not very optimistic for the state of the Union.

 

What Does a Trillion Dollars Look Like?

What Does a Trillion Dollars Look Like?

Back in the mid-1990s I was posted as Economic and Commercial Officer to the U.S. Embassy in Tirana, Albania. This was the time of the massive pyramid schemes into which most of the small country’s population sunk their funds and, with the schemes’ inevitable collapse, when Albania was brought to anarchy. I sounded the warning of what was going on and what would happen shortly after my arrival in Tirana in mid-1995, and my prediction of when the collapse would commence, in October a year later, was accurate almost to the week. To give proper credit, it was economy watchers in other organizations that brought my attention to the building crisis, though the U.S. Embassy and the State Department were blithely ignorant of what was going on until I started reporting on the schemes, gaining me an instant and very interested audience back in Washington.

In the midst of the schemes’ collapse some of the scheme heads and promoters bandied about references to large sums of money that they had taken in, such as $500 million, or even a billion dollars. This in a country of some 3 million people and a per capita income under $1,000. No one seemed to have any concept of what such amounts really meant or how big a billion dollars was, and many were willing to take the claims at face value. So I took it upon myself to write a piece about what a billion dollars – 1,000 million dollars – look like. You can see that piece here.

Now fast forward to 2018, and we here in the U.S. live in a country where not billions, but trillions of dollars, are bandied about like they’re nothing. Consider that the current federal government debt is $21.48 trillion, with an additional $1.2 trillion in state debt and $1.92 trillion in local government debt bringing total public debt to $24.6 trillion. Consumer debt – credit cards, auto loans, student loans, and personal loans – is approaching $4 trillion, and when mortgage debt is added in, private debt in the U.S. stands at $13.21 trillion. U.S. combined public and private debt, therefore, is nearly $38 trillion. Compare those numbers with the country’s Gross Domestic Product – the total sum of domestic economic activity – of about $20 trillion, or the entire world’s total GDP, known as Gross World Product, or GWP, which in 2014 was $78.28 trillion. That means the U.S. debt ratio is approaching (and sometimes surpasses) double U.S. GDP, and is nearly half of total world economic output. Meanwhile, the federal government budget for the fiscal year that begins October 1 is $4.407 trillion, with a projected deficit of $985 billion, which will be added to the debt.

All that is scary enough on its face, but it still doesn’t tell us what a trillion dollars looks like. So let’s dive into that question and try to put a face on that number.

First, the basics. Just as a billion dollars is 1,000 million dollars, a trillion dollars is 1,000 billion dollars, or 1 million million dollars. That’s a 1 with 12 zeroes after it. Like this: 1,000,000,000,000. So if you’re fortunate enough to be a millionaire, with $1 million in assets, you would just need to multiply your fortune 1,000 times to become a billionaire, or to multiply it 1 million times to become a trillionaire. There aren’t any trillionaires in the world – the world’s richest person is Amazon founder Jeff Bezos, worth some $112 billion – but Apple became, at least for awhile, the first contemporary company to surpass $1 trillion in value, based on its stock price, on August 2.

Let’s use some of the same examples I previously used to illustrate a billion dollars, but now to give you some idea of what a trillion dollars look like.

  • Let’s say you go the bank and take out a trillion one-dollar bills. Just for fun, you decide to stretch them out end-to-end. You’d find this to be a tough task since they will stretch some 95,000,000 miles (150,000,000 kms), or 3,800 times around the Earth at the Equator. Actually, since the distance from the Earth to the sun is 93,000,000 miles, you could spread them out across deep space between here and the sun, and a couple million miles on the way back.
  • If you decide you don’t have time for a trip to the sun and part-way back, you ask the bank to give you your trillion dollars in $100 bills, the largest current denomination bill issued by the U.S. Treasury. Laying these notes end-to-end, you’d only have to lay down a trail of 950,000 miles (1,500,000 kms), or a mere 38 times around the Earth at the Equator. If, on the other hand, you’re the space-going type, you’d be able lay them out to the moon and back – twice.
  • Now you go to the bank and just ask the teller to stack your trillion dollars outside. You’ll take them in $100 notes since you don’t have much room in the trunk of your car. You better be prepared, though, for a surprise. Your trillion dollars will stack 631 miles (1,015 kms) high, two and a half times the orbital altitude of the International Space Station. Now if you were to stack the federal budget deficit in $100 bills, you’d have a stack that reaches 13,554 miles (21,813 kms) high. Consider that the Earth’s diameter at the Equator is just 7,900 miles (12,714 kms), and you’ll have some idea of the scale of this. You see now why you had best not ask for your trillion dollars in singles, which would stack 63,100 miles (101,500 kms) high, almost eight times the polar diameter of the Earth. Now multiply that by 21.48 – the number of trillions in the federal budget deficit – and . . . well, you get the idea.
  • Okay, I get it. These dimensions are hard to picture. You’re more the saving type, so let’s see how long it will take you to save a trillion dollars. Notionally, you earn the average (median) U.S. national individual income of around $32,000. Since your spouse fully supports you, and you’re good at not paying any taxes, you’re able to stash away all $32,000. Hopefully patience is one of your stronger characteristics, since it will take you a mere 31 million years – 31,250,000 years, to be exact – to save $1 trillion. Of course, that could pose a problem. Humans in their current form have been on the planet only about 200,000 years. Humanoid ancestors were around about 6 million years ago. So you’re falling short by more than a factor of five of all human and proto-human life on Earth.
  • Now let’s say you’re doing a whole lot better than that and you can save $50,000, not in a year, but in a day. That means you can sock away $18,250,000 a year. In that case, it would only take you 54,794 years to save $1 trillion. If you were to save long enough to pay off all the public and private debt in the U.S., at $50,000/day it would take you 2,071,761 years, more or less, to get the pink slip on the debt. Kind of puts that 30-year mortgage into perspective, doesn’t it?
  • Forget saving. That’s not your style. You’re more the spending type, as is your spouse. You’re among the lucky one percenters, together earning $400,000 a year. You decide to spend it all (taxes be damned), and are aiming to spend a cool $1 trillion. Well, that would only take you a quarter million years – that’s 250,000 years.
  • Let’s say you’re the lucky type, instead. The very lucky type. Starting the year Christ was born, you buy a lottery ticket that miraculously wins and nets you $500 million every single year. You put away that $500 million prize, and the next $500 million prize, and the 1,998 $500 million prizes after that, and you finally reach $1 trillion in winnings – 18 years ago. Two thousand years after your winning streak began, your trillion dollars will go to your distant heirs.
  • Looking at things from a different perspective, the current U.S. federal budget deficit equates to more than $65,950 in debt for every one of the 325.7 million men, women, and children living in the U.S. Adding in all the other debt, and the burden becomes more than $116,000 per every single capita. Again, keep in mind that the average adult annual income is just about $32,000, and average U.S. household income is about $59,000.

So now you have some idea what a trillion dollars looks like. And if that isn’t enough to freak you out, or at minimum give you cause for pause, I don’t know what would.

If you have some other illustrations, please post them here in your comments.