August 20, 2011

America's Fiscal Reality

A friend of mine in Texas republished some recent financial numbers:
    U.S. Tax revenue: $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

Most people glaze over such numbers so he then equated it in simpler terms:
    Annual family income: $21,700
    Money the family spent: $38,200
    New debt on the credit card: $16,500
    Outstanding balance on the credit card: $142,710
    Total budget cuts: $385

Finally, he wrote: "This is an impossible way for a family to survive. Bankruptcy is the only way out. This family is headed for complete failure."

P.S. Keep in mind that anyone who "dares" suggest that much more should be done to get America's fiscal house in order: is mentally unstable, wants to destroy their country, is a terrorist, and/or is a right-wing extremist. So says Obama's foot soldiers in government and in the MSM.

Posted by Robert at August 20, 2011 4:43 PM

Bankrputcy my arse! Just get the kids you don't have to pay for it.

Posted by: Jamie MacMaster at August 20, 2011 5:21 PM

Just fire up the printing press to pay for it.

Posted by: JohnPeg at August 20, 2011 5:32 PM

Wow. Not much more to be said!!!!

Posted by: proud western canadian at August 20, 2011 5:36 PM

Yes we can.

Posted by: Andy at August 20, 2011 5:38 PM

Change you can believe in!!!

Posted by: Mike in White Rock at August 20, 2011 5:57 PM

From solvency to bankruptcy - is that the fundamental transformation Obama was talking about?

Posted by: Kathryn at August 20, 2011 6:21 PM

Change? Like, "Brother can you spare a dime"?

Posted by: signaller222 at August 20, 2011 6:23 PM

I believe Dave Ramsey said it first:

"If the US Government was a family, they would be making $58,000 a year, they spend $75,000 a year, & are $327,000 in credit card debt. They are currently proposing BIG spending cuts to reduce their spending to $72,000 a year. These are the actual proportions of the federal budget & debt, reduced to a level that we can understand." - Dave Ramsey

But yes, it's a startlingly simple way to put it!

Posted by: MichaelV at August 20, 2011 6:37 PM

Looks like even a chimp could understand that analogy. Fax quickly to boss, and a few czars, good luck with that.

Posted by: bartinsky at August 20, 2011 7:00 PM

Don't forget bumming money off of others (China) with no intention of paying it back.

Posted by: The Glengarrian at August 20, 2011 7:05 PM

The noticeable absence of trolls would suggest that even they understand this analogy...KISS for our trolly friends.

Posted by: syncrodox at August 20, 2011 7:07 PM

Thanks for this. The O can create some jobs investing in companies that make calculators and adding machines (yes small biz types still use those relics) that have room on their display for the debt and deficit numbers. My work horse calculator is solar powered. More green jobs. So that would be a good thing :).

Posted by: wnmc at August 20, 2011 7:09 PM

What Jamie MacMaster said.

Not only is the massive debt being handed down to children and grandchildren, it's being handed down to a handful who would barely be able to support themselves, their elderly parents, the number of people who expect other people's kids to look after them, who will have no real job, and will be in competition with bolder Asian superpowers.

Some future.

Posted by: Osumashi Kinyobe at August 20, 2011 7:15 PM

Too complex for Paul Krugman to fathom.

Much too complex.

Posted by: Fred at August 20, 2011 7:16 PM

Obviously too simple to be comprehended by the nobel prize winning economists who are a large part of the reason the US is economically FUBAR. The only way out of this situation is for massive inflation and the US national debt will then be equivalent to the cost of a loaf of bread. Of course this might not sit well with those countries who've loaned money to the US and the one thing the US should not cut is the military budget or the whole country will be the focus of the largest bankruptcy sale in history presided over by the chicoms.

Posted by: loki at August 20, 2011 7:55 PM

Paul Krugman would say the analogy is fallacious. He'd say that the family could increase its income at will by demanding that the greedy boss and his customers pony up more dough.

He'd say that if we just stop paying the bills for our home security system and sell the shotgun by the bed, we could pay down these debts faster.

He'd say that if we did something stupid, like cutting back on cable television, donations to NPR, cafe lattes, and canceling our purchase of solar panels, all we'd do is convince our boss that we don't need to be paid as well as we are now.

Posted by: POWinCA at August 20, 2011 8:17 PM

Let's remember how important it is to stay in Iraq and Afghanistn. That silly Ron Paul....

Posted by: Hasse@Norway at August 20, 2011 8:28 PM

Can someone do some attribution to those facts, if not the entire work? I'd like to forward this one...

Posted by: geek49203 at August 20, 2011 8:30 PM


"Let's remember how important it is to stay in Iraq and Afghanistn. That silly Ron Paul...."

like with Obambam, this is way over yer hea ain't it. Those costs are peenutz compared to what is needed, now cut penny waste, entitlemnets by 50%, and reduce gubmint teat suckers by 50%, and you could up the spending on Iraq and Af'stan and still make a dent in the out standing debt

Posted by: GYM at August 20, 2011 8:53 PM

The noticeable absence of trolls would suggest that even they understand this analogy...KISS for our trolly friends.

Posted by: syncrodox at August 20, 2011 7:07 PM

Hee, hee, heeeeeeeeeeeeee...

That - or they're busy on their ouija boards trying to raise old J.M Keynes.

Posted by: Jamie MacMaster at August 20, 2011 10:05 PM

The standard household doesn't own a printing press.

Posted by: VancouverGuy at August 20, 2011 10:13 PM

"Too complex for Paul Krugman to fathom.

Much too complex."

Now, now.....He has a plan for recovery. Space aliens and the money spend protecting us from that threat.

What more do you want ?

Posted by: atwoodsux at August 20, 2011 11:53 PM

If that wasn't depressing enough...

The US is 11th (IMF) with Canada not far behind. Their deficit is greater, but not by much.

Posted by: Andrew at August 21, 2011 12:08 AM

Um... but a lefty just informed me, and I quote: "In...(the past 30 years), government spending as a portion of national output (GDP) has basically flatlined."

So clearly you're all upset about nothing.

Posted by: Black Mamba at August 21, 2011 12:23 AM

It's increasingly obvious that the current federal system is unsustainable. There must be a large reduction in the size of government - this can no longer be put off or avoided. The alternative is insolvency or revolt.

Posted by: Occam at August 21, 2011 12:45 AM

Except it isn't debt on a credit card. It's a thirty year bond interest payment that has to be made of 3.3%.

That bond pledge is on the assets and economic earning capability of the entire united states. And what is the value of that? 200 trillion? Who knows.

I'm not saying that the US has a fiscal problem - a very nasty one indeed, but I think it's important not to overstate it. Its bad enough for a whole bunch of reasons besides solvency - the decline of American military might being just one - that it is unnecessary to exaggerate.

Posted by: Gord Tulk at August 21, 2011 12:45 AM

Every major recession in history has been followed by war. Full employment and wipes the slate clean for the winner. We will only use nukes if we start to lose. Good luck.

Posted by: peterj at August 21, 2011 1:53 AM

Gold silver and ammo.

And maybe an army helmet while you're at it....

Posted by: eastern paul at August 21, 2011 7:27 AM

With US tax revenue at only 14.8% of GDP maybe they do need to think about raising taxes to get out of this mess?

Posted by: ryan;-P at August 21, 2011 7:53 AM

"With US tax revenue at only 14.8% of GDP maybe they do need to think about raising taxes to get out of this mess?"

Sure ryan;-p. Taking 20% of a GDP that's 30% smaller would be the exact kind of mathematical prowess one would expect from DemocRats.

You do understand that a dollar taxed from the economy reduces the economy by more than a dollar, right? I've seen sources that quote the ratio at 1:10, one tax dollar costs ten dollars in lost productivity and growth. Compound interest, y'know.

Laffer Curve. Its on Google.

Posted by: The Phantom at August 21, 2011 9:29 AM

Increase revenue by gradually get rid of the home mortgage interest tax deductions and put in a national sales tax like Canada are two important steps towards fiscal sanity.

Then look at the horrendous waste that needs to be controlled.

Posted by: Canuckguy at August 21, 2011 11:07 AM

Raise revenue by gradually eliminating the mortgage interest tax deduction and installion of a national sales tax like Canada's are two important steps towards fiscal sanity.

Cut expenditures by reviewing sacred cow entitlements.

It's not rocket science.

Posted by: Canuckguy at August 21, 2011 11:10 AM

opps, thought the first wise wisdom advice did not take.

Posted by: Canuckguy at August 21, 2011 11:12 AM

WRONG!!! There are no "budget cuts," only a statement of intent to reduce some cost out in the vague future!
Think of your family discussion. "We have to reduce our costs and I'm getting rid of one of the cars, one of the 'phone lines and you kids will have to clean the pool because I'm firing the pool service guy, all at the end of this month."
Compare that with the federal approach, "We have to reduce our costs, so next year we'll have to vacation in a less expansive place."
There have been no budget cuts!!

Posted by: TexEd at August 21, 2011 1:23 PM

Actually, the reality is unpalatable to all sides of the political spectrum and thus will be denied:

There needs to be both an increase in taxes and a reduction in spending.

Or, in terms of an individual: you need to put lots more money against your VISA debt to bring down the outstanding balance while simultaneously ceasing all personal spending on the card.

Posted by: JJM at August 21, 2011 1:54 PM

Eastern Paul, the one item to stockpile that I'd agree with you is ammo. Gold and silver assume that there will be buyers for those items if we end up in a SHTF scenario and they're not immediately useful. Gold and silver have their limited uses, but copper is likely to be in much higher demand. Canned food would be my next choice after ammo and need to talk to my accountant to see if I can plow all of my RRSP's into farmland which will keep it's value far better than T-bills which are appreciating at less than the value of inflation.

Making sure one has spare parts for all common household machinery and lots of tools would be a very wise investment decision now. Finding good quality tools, OTOH, is a bit complicated now as there's so much chicom crap out there. I just wish that gasoline was a lot easier to stockpile and have to talk to people who want to get rid of heating oil tanks to buy one and bury it in my yard.

Posted by: loki at August 22, 2011 12:28 AM

Chill out. Relax.
The sky is not going to fall.
No need to hide in a cave with your guns and canned beans.

Posted by: Canuckguy at August 22, 2011 7:32 AM

@ The Phantom:

Hey just asking an honest question. I'm not an economist appreciate your response, but could have done with the snarkiness....

Posted by: ryan;-P at August 22, 2011 5:31 PM