Politicians generally know the importance of translating complicated policy into language that non-wonks can understand. When it comes to budget numbers, that can be challenging. Many Americans don’t know how many zeros are in a “trillion,” much less what a trillion deficit means in terms of the economy and its economic effects. In this poll question, for example, respondents were given five multiple-choice answers for the question “how many thousands are in a trillion” and just 21 percent answered correctly (barely more than you would expect if everyone guessed randomly).
The Gainesville Tea Party seems to have the right idea: They take some of our key economic numbers — how much money the U.S. government brings in, how much it spends, and how much brave politicians are “cutting” to bring those numbers into balance — and simply lop off eight zeros (i.e., divide by 100 million) to make those numbers something that American families can relate to:
Why S&P Downgraded the US:
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 [April] budget cut: $ 38,500,000,000
Let’s remove 8 zeros and pretend it’s a household budget:
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
Budget cuts: $385
Even as a self-described policy wonk, I found this eye-opening. It’s harder to pretend that Washington leadership is serious about restoring fiscal sanity when their budget cuts are seen in this context.
The old "government is like a household" routine. Appeals to the dumb doesn't it? How many households do you know that can levy taxes, print money, or borrow long term at zero interest?
Reply to this commentLinkReport AbuseUnfortunately not as many as those who think raising taxes has no impact on jobs, printing money has no impact on the value of the dollar, and borrowing your way out of debt isn't an oxymoron.
Reply to this commentLinkReport AbuseThe fundamentals of budget management, IE: don't spend more than you make, still apply, and that is what the message is. The American public needs to have an idea of the situation we're in, this example brings it into perspective.
Regardless of what you think, it's still foolish to be spending that much more than you make.
Reply to this commentLinkReport AbuseThat easy answer,"government isn't a household budget" certainly appeals to those with delusions of sophistication, doesn't it? Obviously, households can't tax or print money to solve their budget woes. That doesn't change the fact that for the government, or household that they are budget woes. It also doesn't change the fact that raising taxes and printing money are undesirable solutions that will tend to decrease future earnings and prosperity.
Reply to this commentLinkReport AbuseEven if you don't want to use the "government is like a household" routine, the fact still remains, it is impossible to spend more than you make for an infinite amount of time. Eventually, you either make cuts and sacrifices to deal with the debt, or you get buried in the debt.
Reply to this commentLinkReport AbuseSo you think the government can just print money in infinite amounts, forever, in order to deal with the debt, and there will be no bad consequences.
Talk about appealing to the dumb...
Reply to this commentLinkReport AbuseDon't want them to run it like a household? Okay, whaddya say we make them run it like a republic? With only those powers enumerated by the constitution, and an annual budget debated/passed as required by statute?
Ouch, seems Harry Reid can't figure out how to do those things.
So in lieu of capable stewardship I'll settle for seeing our "leaders" run it like a household. It's my money.
Reply to this commentLinkReport AbuseIndeed, a government can
1. Levy taxes, thereby removing that capital from the private sector, where it is either spent or invested. Both of those activities are more economically valuable than government spending. Not to mention the disincentive tax increases provide to growth.
2. Print money. But printing more money without a corresponding amount of growth in the economy will produce inflation. If you double the number of dollars in existence, the person with a barrel of oil (or any commodity) will demand twice as many of them to sell it to you.
3. Borrow long-term at zero interest. As long as someone is willing to lend that money to them. To the extent that the lender believes the currency used to repay the loan will be worth less that the currency loaned, the lender will demand interest to offset that. And the government must still compete with other investments, which will offer greater return.
Reply to this commentLinkReport AbuseIn a household, you typically have emotional bonds and commitments that will keep the members pulling together to work toward resolving problems. Members take on extra jobs, eliminate discretionary spending and do for themselves things they might in the past have paid others to do. They do this not just to to limit their own suffering, but also that of the people they care for.
Those bonds do not exist to anywhere near the same degree in citizens who share a nation. Absent such bonds, culprits find it too easy to hide rather than accept responsibility and change their ways and those who have always been fiscally responsible have no natural compulsion to bankrupt themselves to bail out culprits.
Leaders who repeatedly scold citizens about their "shared values" should ask themselves why - if those values are truly "shared" - they find it necessary to use the force of state to impose them. Perhaps the VALUES are only SHARED within the context of RELATIONSHIPS, the strength of which lessens the further you get from the self-chosen, such as the family and local community.
So, as bad as the "debt and unwillingness to address it" situation looks when reduced to the example of the family household, it looks much worse when considered at the national level. It threatens what little glue there is holding the whole thing together.
Reply to this commentLinkReport AbuseA real budget, or course, always includes assets. What does the family balance sheet look like? Do they have bling in the driveway? What is the balance of their financial assets? Do they live in a nice home?
Reply to this commentLinkReport AbuseEvery time you hear the phrase "$100 Billion" it costs you, personally, $300. For a family of four, that is $1200. Every time you hear the phrase "$1 Trillion" it costs you $3,000. For your family of four, you just spent $12,000. Oh, wait, are you part of the 50% that pays income taxes? Better double those amounts.
If I were running for Federal office this would be the cornerstone of every speech. No one really understands $1 Trillion. Most of us can understand $3000. For example, Obama wants to raise taxes $1.5 trillion. That is a cool $9,000 per taxpayer.
The current federal debt is, what, $14 trillion? $42,000 per capita. Look around any room you are in - how many people do you see that can pay out $42,000 ($168,000 for a family of four) over any time span you care to name. Now, consider that the unpaid portion that all those who could NEVER pay that amount, in full or in part, must be paid by, well, somebody. Let us further assume that you are pretty well off and could pay your share, or even your families share. How many shares can you pick up of all those who cannot pay theirs? Hmmmm? John Kerry, Bill Gates, and Warren Buffet notwithstanding there just are not enough rich people.
But, not to worry. We are currently spending only $1.5 trillion more than we take in, so your share of the debt is only rising by $4,500 (for each member of your family)or so this year - well, $9,000 if you pay income taxes.
Reply to this commentLinkReport AbuseSo if that is the case, wouldn't one solution be to increase your family income i.e. raising taxes? And yes, I agree the politicians are not serious, but both parties are not serious. You cannot solve the budget without both revenue increases and spending cuts; the democrats refuse to do the second at all and the first enough, the republican refuse to do the first at all and the second enough. So yes, We Are Doomed!
Reply to this commentLinkReport AbuseWhen I see real cuts in any proposed budget then we can talk. Until then - we have a spending problem - not a revenue problem.
Reply to this commentLinkReport AbuseWe are already over taxed. Taxes need to be lowered, not raised further.
Reply to this commentLinkReport AbuseDo you give a person with a gambling addiction more money to gamble with?
We have increased Federal Government Spending by 25% since Obama took office, yet we can't slow the RATE OF GROWTH by a 1% without being told that children are going to starve and granny is going to die from lack of medical care.
And historically, it is tax cuts in a bad economy that have spurred economic growth and increased federal tax revenue, not tax increases. (See Kennedy, Reagan and GWB).
Reply to this commentLinkReport AbuseA good way to describe a trillion to people is to say it's like giving every man, woman, and child in Dallas a million dollars.
Reply to this commentLinkReport AbusePlease, please, somebody ask Obama “how many thousands are in a trillion." He doesn't know either.
Reply to this commentLinkReport AbuseExcellent. I put the link on my Facebook page.
Reply to this commentLinkReport AbuseThis is nothing new but the perspective makes it even more breath taking. We a nation with no sense of budgeting, with no sense of long term planning, with no sense of delayed gratification, with.....no sense. We are mooches, Madoffs, and everybody's stereo-typical layabout brother-in-law or worthless nephew blowing through his inheritance. We have and are mortgaging a wonderful economic inheritance with no realistic plan or way to pay it off. If I know us we are too honorable to steal back our debt by default. But I'm pretty sure we are not too honorable to steal it back by inflation.
Reply to this commentLinkReport AbuseAs a tool for putting the federal budget into numbers average Americans can wrap their heads around this works pretty well. However, I would have liked to see family spending broken down into living expenses and interest on the credit card.
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