Guest
08-04-2011, 10:48 PM
I received this from a friend. I thought it was a particulalry good summary of the "arithmetic problem" I've been harping on here for the better part of a year.
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OK, the federal government isn't like the typical American family. But the comparison numbers below shows how little Congress did to accomplish fiscal reform over these past few months. And they'll probably continue to "kick the can down the road" until the folks from the credit card companies in Beijing, Tokyo and Riyadh decide enough is enough. But hey, we're still AAA, aren’t we? Let’s throw a big party. Invite all the poor people. Send the bill to the government.
Federal Budget 101
The U.S. Congress sets a federal budget every year in the trillions of dollars. Few people know how much money that is so we created a breakdown of federal spending in simple terms. Let's put the 2011 federal budget into perspective:
U.S. tax revenues: $2,170,000,000,000
Federal budget: $3,820,000,000,000
New debt: $1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cut: $38,500,000,000 (about 1% of the budget)
It helps to think about these numbers in terms that we can relate to. Let's remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family.
Total annual income for the Jones family: $21,700
Amount of money the Jones family spent: $38,200
Amount of new debt added to the credit card: $16,500
Outstanding balance on the credit card: $142,710
Amount cut from the budget: $385
So in effect last month Congress, or in this example the Jones family, sat down at the kitchen table and after a lot of heated debate and arguing with one another agreed to cut $385 from the annual family budget. What family would cut $385 of spending in order to solve $16,500 in deficit spending and begin to repay a $142,000 loan?
It is a start, although hardly a solution.
Now after years of this, the Jones family has $142,710 of debt on its credit card (which is the equivalent of the national debt).
You would think the Jones family would recognize and address this situation, but it does not. Neither does Congress. Neither do enough people in the U.S., to make a difference.
The root of the debt problem is that the voters typically do not send people to Congress to save money. They are sent there to bring home the bacon to their own home Congressional district and state.
To effect budget change, we need to change the job description and give Congress new marching orders.
It is awfully hard (but not impossible) to reverse course and tell the government to stop borrowing money from our children and spending it now.
In effect, what we have is a reverse mortgage on the country. The problem is that the voters have become addicted to the money. Moreover, the American voters are still in the denial stage, and do not want to face the possibility of going into rehab. Pretty much the same as the people in Greece. But they have the Germans to bail them out.
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OK, the federal government isn't like the typical American family. But the comparison numbers below shows how little Congress did to accomplish fiscal reform over these past few months. And they'll probably continue to "kick the can down the road" until the folks from the credit card companies in Beijing, Tokyo and Riyadh decide enough is enough. But hey, we're still AAA, aren’t we? Let’s throw a big party. Invite all the poor people. Send the bill to the government.
Federal Budget 101
The U.S. Congress sets a federal budget every year in the trillions of dollars. Few people know how much money that is so we created a breakdown of federal spending in simple terms. Let's put the 2011 federal budget into perspective:
U.S. tax revenues: $2,170,000,000,000
Federal budget: $3,820,000,000,000
New debt: $1,650,000,000,000
National debt: $14,271,000,000,000
Recent budget cut: $38,500,000,000 (about 1% of the budget)
It helps to think about these numbers in terms that we can relate to. Let's remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family.
Total annual income for the Jones family: $21,700
Amount of money the Jones family spent: $38,200
Amount of new debt added to the credit card: $16,500
Outstanding balance on the credit card: $142,710
Amount cut from the budget: $385
So in effect last month Congress, or in this example the Jones family, sat down at the kitchen table and after a lot of heated debate and arguing with one another agreed to cut $385 from the annual family budget. What family would cut $385 of spending in order to solve $16,500 in deficit spending and begin to repay a $142,000 loan?
It is a start, although hardly a solution.
Now after years of this, the Jones family has $142,710 of debt on its credit card (which is the equivalent of the national debt).
You would think the Jones family would recognize and address this situation, but it does not. Neither does Congress. Neither do enough people in the U.S., to make a difference.
The root of the debt problem is that the voters typically do not send people to Congress to save money. They are sent there to bring home the bacon to their own home Congressional district and state.
To effect budget change, we need to change the job description and give Congress new marching orders.
It is awfully hard (but not impossible) to reverse course and tell the government to stop borrowing money from our children and spending it now.
In effect, what we have is a reverse mortgage on the country. The problem is that the voters have become addicted to the money. Moreover, the American voters are still in the denial stage, and do not want to face the possibility of going into rehab. Pretty much the same as the people in Greece. But they have the Germans to bail them out.