Those who know me know to keep me away from numbers. Here’s a couple of posts that attempt to put the recent controversy over the USA’s federal budget into perspective, especially the triumphant posturing about the US$38 billion dollar deficit reduction.
From Philip Greenspun:
How can an individual voter make sense of quantities that are ordinarily written in scientific notation? I think the easiest way is to divide everything by 100,000,000 (10^8).
Let’s start with federal spending. The FY 2011 federal budget is approximately $3.82 trillion (3.82×10^12). Of that, approximately $2.17 trillion will be paid for by taxes collected and the remaining $1.65 trillion will be borrowed from our grandchildren. If we divide everything by 100 million, the numbers begin to make more sense.
We have a family that is spending $38,200 per year. The family’s income is $21,700 per year. The family adds $16,500 in credit card debt every year in order to pay its bills. After a long and difficult debate among family members, keeping in mind that it was not going to be possible to borrow $16,500 every year forever, the parents and children agreed that a $380/year premium cable subscription could be terminated. So now the family will have to borrow only $16,120 per year.
In a similar vein, Dave Ramsay decides ‘it’d be fun to turn those figures into something we can understand a little better—like a household budget.’
The federal government will take in $2.173 trillion in 2011. That’s their income, and it sounds pretty good. Until, that is, you factor in that the federal government will spend $3.818 trillion during the year. So, just like many families, the government’s outgo exceeds their income—to the tune of $1.645 trillion in overspending. That’s called the deficit. Altogether, the government has $14.2 trillion in debt.
What would happen if John Q. Public and his wife called my show with these kinds of numbers? Here’s how their financial situation would stack up:
If their household income was $55,000 per year, they’d actually be spending $96,500—$41,500 more than they made! That means they’re spending 175% of their annual income! So, in 2011 they’d add $41,500 of debt to their current credit card debt of $366,000!
What’s the first step to get out of debt? Stop overspending! But that means a family that is used to spending $96,500 a year has to learn how to live on $55,000. That’s a tough pill to swallow. Those kinds of spending cuts seriously hurt, but it’s the only way out of debt for John Q. Public.
If I ever got a call from a family that was spending $41,500 more than they made every year, you would definitely expect me to yell at them for their dumb behavior, right?
And the telling point is that this is not a one-off course of action, but that they’ll do exactly the same thing year after year.
It doesn’t seem sustainable, does it?
There are allusions in these scenarios to an aspect of the Gospel. We have a huge debt that only gets worse and Jesus pays it in full.
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