Eye-Opening: The U.S. Budget Explained As a Family’s Household Budget

We have a hard time understanding big numbers, because we never encounter them in day-to-day life. “1 Trillion Dollars”? What does that even mean?

Carrie Lukas at NRO’s The Corner blog points us to something very helpful — explaining the U.S. Budget in terms of a household budget:

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

As Carrie observed, this comparison is extremely eye-opening. It shows just how unsustainable and irresponsible our current government spending, debt and deficit is.

How on earth, in this context, can liberals and progressives continue to argue for even MORE spending and even LESS budget cuts? A family seriously carrying on business as usual with these sorts of numbers would be insane, or at the very least extremely imprudent.

How is this sort of spending, debt, and deficit possibly moral on a grand scale when we can see how clearly unwise it is on a family scale?



  • http://www.facebook.com/jean.p.plaster Jean Parker Plaster

    Hopefully people can understand this

  • Steven Damron

    The analogy of the family budget would be useful if the government were an actual family.

    In this analogy, income never goes up. This analogy says that you can never get a better paying job for the rest of your life, so live that way. That is analogous to never having an economic recovery and never enjoying the resulting increase in taxes. Not a tax increase from higher tax rates, a tax increase from a better economy that will pay down the debt.

    Please stop using the household budget analogy!

    We are at the bottom of an economic cycle. The private sector is not hiring because consumer demand is not increasing. The economy needs a big kick-start. The one segment of the economy that can generate that large a kick-start is the government. Without the kick-start, private sector keeps shedding jobs to maintain its profits. That’s a really bad place to go. 80 years ago they called it The Depression.

    To me, a better analogy is this: there is a giant gold mine in America. Huge. Several trillion dollars worth. But it will take $500B or so to open up this mine and start operations. It’s not something that just happens by watching your budget. It takes an investment.

    So, America, do you want to sit on your hands, whittle down your expenses, and forgo health care and roads and education? Or do you want to go to work? Are you willing to kick-start this gold mine called America, or do you want to sit on the porch counting pennies and watch China and the rest of the world pass us by?

    I want the gold mine.

  • jon

    The difference is that the USA is not a regular family. It’s like a mafia family at the top of their game. What you don’t see is that a great amount of the money the family spends go toward hiring hit men, buying tommy guns, pocket knives, and roman candles – the family business is holding up people on the street and forcing them to “lend money” to the family – or else.

    The kids start young in this family business – kids as young as seventeen or eighteen are hired to be trained to carry on the family line as “enforcers” so the whole family can live comfortably.

    Not saying it’s good or bad – it’s just the way it is in this big bad world. If you want to use the family budget conceit, at least consider the bigger picture.



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