The National Debt Crisis expressed on the level of the family budget.

[MiddleFingerMom]

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Oversimplified though it may be, is this FINALLY a way for Everyperson to
get a hint of a grasp on the previously ungraspable numbers involved in
the billions and trillions of dollars involved in the national debt?
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Whether the numbers are accurate or not seems a moot point -- the actual
concept may FINALLY be something to which I can relate.
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Am I missing something here? Has it REALLY been as basic as this the
whole time?
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[gateley]

1. Makes it much easier for me to grasp -- thanks! nt

[dkf]

2. Nicely done.

[pkdu]

3. Yep ....Thats what 10 years of Bush Tax Cuts gets you n/t

[devils chaplain]

4. The Bush tax cuts were horrible, but...

The Bush tax cuts have "only" cost $2.5 trillion since 2001 (source: http://thinkprogress.org/economy/2011/06/07/237560/10-years-bush-tax-cuts/). In addition, the Bush wars have cost us approximately $1.2 trillion since 2001 (source: http://costofwar.com/en/). Add those up and the total is $3.7 trillion.

Meanwhile our national debt has increased by over $9 trillion since then.

Eliminating all of that would be a good start but unfortunately the problems we face are very, very large and I really don't see anyway around things getting worse without 60 reliable votes in the Senate. :(

[spin]

5. K&R ... excellent post. Thanks. (n/t)

[GeorgeGist]

6. You forgot to include ...

the hoards of cash that Dad has in his secret bank account.

[taught_me_patience]

7. It puts it into perspective clearly

but please do not think of government debt in any way similar to household debt.

[CaliforniaPeggy]

8. That REALLY helps!

This is a much more understandable scale.

Thank you, my dear MFM!

[Prophet 451]

9. I wish people wouldn't use that comparison

There's really no commonality between the two and pretending there is just helps the idiots who shout that government should "tighten it's belt".

[Bluebear]

11. +

[MiddleFingerMom]

12. That's two people who say they're nothing alike and neither one said WHY.

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That's why I posted this -- if the analogy doesn't work, please point out where it fails.
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And conservatives are going to shout that government should tighten its belt, whether the
comparison is being used or not. As liberals -- we know there are other things on which to
focus. A family member could stop spending outrageous amounts of money on a gun collection --
and that person's employer, instead of exploiting him or her by UNDERpaying for his/her
job... could be expected to pay more (family income) for his/her services. The credit cards
could be used for investment such as a college education... or home improvement to increase
its equity rather than more pistols to yank on. Why does this need to go right to a vague
"the gov't should tighten its belt".
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Serious post. If it doesn't work, I'm hoping for an EXPLANATION of why. Serious questions
about your unsupported proclamation.
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Sometimes I think Dems are mostly from Missouri at heart -- don't just tell me.
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Show me.
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So, if this IS a good model... don't just sweep it under the rug by proclaiming there is
no commonality. Show WHY that is so -- that's also what we do as liberals.
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And I wouldn't mind seeing the government YANK its belt tighter on defense spending.
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No commonality -- just don't SAY that -- show it. Please.
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[Zywiec]

13. Because they don't know. Just something they heard. n/t

[taught_me_patience]

15. There are many reasons

#1) Governments exist in perpetuity, therefore debt does not have to be "paid off".
#2) Government income is often a function of it expenditures.
#3) Governments can print money to pay off debts

[Blecht]

18. It's not something that you can make a simple list for

It's complicated. Most people don't have time to make the case for something complicated on an Internet forum. I certainly don't, but I do understand it, and there are many out there who have already addressed the issue.

Here is a good blog post that summarizes a few of the reasons and references some other sources: http://www.washingtonmonthly.com/political-animal/2011_05/the_misguided_family_budget_an029671.php

It is a good place to get started so you can educate yourself on this issue. Maybe then you will stop spreading right-wing rubbish.

[Prophet 451]

28. OK, I'll give it a try but this is pretty complicated

Firstly, tax revenues, unlike your salary, is adjustable. What I mean is, you do not (probably) have the option of simply going to your boss and demanding additional money. The government does have that option. The government can, in theory, just say "your tax rate is now X". Assuming that you have an average family, you have one, or perhaps two, sources of income and to increase those, you can either work longer or demand more cash. Government has literally hundreds of possible sources of income, all of which can be tinkered with ad infinitum.

Secondly, more importantly and the one point that makes the whole comparison invalid, because the hypothetical family CAN simply cut back on spending and bring it's finances back into order. For a government to do that is suicide. In order to correct an economic downturn, governments have to engage in counter-cyclical spending. What that means is that, when consumers aren't spending (because they have no cash), it is up to the government to spend, thus putting cash in people's pockets. They then spend that money, creating demand and, in theory, the whole system starts moving again. This is one of the principle premises of Keynesian economic theory. Now, I'm not an economist. My expertise on Keynesian economics comes from reading a few books but the important part is, Keynesian economics works. Getting out of debt by spending more is counter-productive for a family but for a country, it's a sound strategy (assuming the money is spent in the right areas anyway, you can't just cut everyone a cheque like W did). The money has to be spent on something which will put people to work ASAP, preferably working class people so they go out and spend the cash. This is the basic principle of stimulus spending.

Thirdly, nations cannot go bankrupt. Not in the same way as a family can. They can default on their debts or devalue their currency and those can be calamities in themselves but they cannot literally go bankrupt.

Fourth, a great deal of the money owed by governments (most governments) is money owed to itself. A family cannot move money between one pot and another to balance the books, not for long anyway. But a government can and does. Something like two-thirds of the American national debt is actually money the government owes to various parts of itself. Now, does that money have to be repaid eventually? Yes. But unlike your family, the government as both the debtor and lender, can set the terms and timescale of the repayment.

Five, governments can print their own cash. And, in the short term, they can do so relatively free of consequences.

So there's five major differences off the top of my head and, as I said, the second is so major that it really disproves the comparison in itself.

BTW, I'm British. And I wouldn't mind seeing someone take an axe to military spending either.That isn't stimulative spending.

[SharonAnn]

38. They could stop buying a house, or a car, or borrowing for college, or ....

Households buy things, important things, with borrowed money all the time.

And in an emergency, they borrow (using credit cards if they must) for groceries,utilities, gasoline, etc. to survive and make it to another day when hopefully they'll have income coming in.

[Blue_Tires]

29. yeah, it's right up there with the well-worn "run government like a business"

[Prophet 451]

31. Oddly enough, that's (slightloy) more plausable

Thing is, if you actually did run government like a business, that would involve the government offering goods and services; de facto socialisation (on some level and certainly enough to set off the wingers).

[Blue_Tires]

32. i usually think 'minimal quality goods and services at maximum profits'

[Prophet 451]

33. Doesn't have to be

I have a theory (which I call "backstop theory") that, in sectors which have a captive market (meaning, you cannot leave the market without great risk or inconvienience: Water, gas, electricity, mail, healthcare and, perhaps, telecoms), the state should provide a bare-bones service at non-profit prices. That way, those companies which service those sectors can't fleece you because you have an automatic "backstop", a fallback option which, by default, establishes a minimum standard in those sectors. In order to compete, other companies have to offer a better product, better price or both. And I always thought that was the essence of capitalism.

[onethatcares]

10. shouldn't there be a line there that says something like

Money family spent on old credit card debt & interest run up by crazy uncle?

Somewhere between AFI & NDCC?

[NNN0LHI]

14. Do those facts and figures come from Gilbert Watch by any chance?

[DrunkenBoat]

34. It shows up there, credited to theospark.net on 8/28.

http://www.gilbertwatch.com/node/508

theo spark = a winger site. the weird thing is, i don't find it there.

but it seems to be one of those things that's been making the round for some time, maybe by email. there are hits for it back in 2010, but postings seem to have jumped exponentially in august for some reason. mostly winger sites.

[Volaris]

16. well, when they say

"for everything else, there's Mastercard", I guess they kinda aren't kidding. What REALLY pisses me off about this whole issue to this point is that that supposed Annual Family Income amount of appx. $22000 is (in this analogy) the income of the 18 year old kid trying to pay his way through college, while mom and dad make 50-60 G's a year (EACH) and (either) horde it like misers or spend it like drunk pirates. In this debate, it is mentioned NOWHERE that it might be possible to actually raise revenues from the people who have it to spare.

I get that the above analogies might not make much sense, but its early in the morning, and I haven't been to bed yet. If clarifacation is needed, just ask Ill be happy to answer any ?'s

Peace,

[Blecht]

17. Thanks for nothing

This is simply helping to entrench the idea that it's possible to compare the two, a completely bogus right-wing meme.

[nolabear]

25. This isn't an argument, which the poster was asking for. This is abuse.

Jump in and discuss in a real way. I'm curious too.

[Blecht]

35. I'd hardly call it "abuse"

A simplistic regurgitation of right-wing talking points needs to be called out for what it is.

It's really discouraging to hear this crap coming from a Democratic POTUS and to read it on a Democratic message board.

This has been debunked by people with more time to write than I have. (Google "family budget government analogy debunked" and you will find more than enough information to satisfy your curiosity.)

Of all the Google hits, this one is probably the shortest and easiest to read -- perfect for people arguing on an Internet forum like DU: http://www.businessinsider.com/the-federal-balance-sheet-is-nothing-like-your-household-balance-sheet-so-you-shouldnt-freak-out-about-debt-2010-2

Let me restate one important difference between a family and the US of A that is the easiest of all to understand. If a family prints money in their garage, they get arrested and go to jail for a long, long time. The US government in conjunction with the Federal Reserve can print money any time they want. Exactly who does what in the money creation is pretty damn complicated. It is one of the reasons these right-wing memes gain so much traction; they're simple, easy to understand, and they sound reasonable. That does not make them correct.

[hunter]

19. The annual family income would be much higher than that...

... but dad is embezzling from the family business to support his cocaine habit, his mistresses and prostitutes, his bookie, his thugs and cronies, his day trading, his corporate jets and yachts, his gym memberships, his apartments in Manhattan, London, Singapore, and Rio...

And then he says he's so tired and he works so hard and he's never home, and his taxes are too high, so sorry mom, I guess you'll have to apply for food stamps and hope you don't get sick before the SSI comes through, and maybe you can patch that hole in the roof and fix the leaky toilet and hold the rusty old car together with that magic tape you see on TV.

Here's ten dollars...

[popsicle ricky]

20. But Mom has a war habit and she blows about 20K

[hunter]

21. Well, she likes sailors...

... and aircraft carriers are full of them.



USS George H.W. Bush (wikipedia), $6.2 billion dollars

[FreeJoe]

22. A couple of points

Families don't pay 1 to 3% interest on their debts, but the government currently does. Our government debts are much cheaper than people's personal debts.

A big part of that debt is in the form of investments. We borrow money to build things that have lasting value, like research facilities, military hardware, and even investments in people's educations. It makes sense to pay for those things with loans. If you didn't, you would have taxed people in the past to pay for something used by people in the future. By financing those things, current taxpayers pay for them during their useable lifespan. My point is that not all government borrowing is bad.

[MiddleFingerMom]

23. I think I see what happened here... this post STARTED off as nothing more than....

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... a way to scale down the ENORMITY of the numbers involved to a
more easily understandable level (who the hell knows what a billion
really is?).
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Because "household debt" has been compared to "national debt" by
others with a focus on how each was handled-- that does NOT mean
that that is what was being done here.
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No mention (until introduced around the 10th post) was made by ANYBODY
about the nature of the debt nor was a comparison made of how they're
handled.
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Until that point, it was to me (and I think to others) simply a matter
of having a better understanding of the values of the numbers themselves.
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Up until that point, it had nothing to do with ideology -- only math
and numbers so astronomical as to be outside the real grasp of the vast
majority of us.
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And as I said, "Whether the numbers are accurate or not seems a moot point --
the actual concept may FINALLY be something to which I can relate."
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The "concept" of the numbers -- nothing about the "budgets" themselves.
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[NNN0LHI]

24. That is why I asked if you found this on Gilbert Watch?

Gilbert always seems to use numbers in nonsensical ways. Not sure why he does it or what he is hoping to prove? But he is a bit obsessed with numbers I have noticed.

Is that where these numbers originated from?

Don

[MiddleFingerMom]

27. They did not originate from Gilbert Watch (that I'm aware of). I got them from a nonpolitical site.

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I'm not sure if you're getting my point -- for what I was demonstrating, the numbers (and
the "accuracy" of those numbers) is moot. It was merely an attempt to scale DOWN the
numbers to a more comprehensible level.
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I had no way of verifying those numbers (I'm pretty sure they're arbitrary -- at least the
"family budget" numbers)... but for my purpose, it didn't matter. They weren't there to
support any argument -- THERE WAS NO ARGUMENT.
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I had found them to be VERY enlightening to me about the otherwise "ungraspable" enormity
of billions and trillions of anything.
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Maybe this is similar -- in Sector A there are 3 billion stars. In Sector B (the same size),
there are 20 billion stars.
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WTF?
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3 billion or 20 billion... them's a shitload of stars -- snd anything above 1.8 billion anything
is pretty incomprehensible to the general populace (I gotcher 1.8 billion "nonsensical number"
right THERE!!!)

More easily understood (and the same relationship between the numbers) is that on the top
rack of your dishwasher, your have 3 coffee cups. On the bottom rack, there are 20 coffee
cups.
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No ideology -- just comparative ratios.
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[Major Hogwash]

26. I think it helps people to understand how the country went broke under Bush.

I was one of those who thought Obama's speech a few months ago using the family budget comparison to the federal government's budget helped people understand the concept.

So, I think this is a good post, a good way to get the point across that Bush not only added $8 Trillion to the debt, he did it while playing golf and making stupid comments at White House Correspondence dinners.

I think it was the 2004 White House Correspondence dinner where Bush made jokes about not being able to find WMD's in Iraq.
Like that was so fucking funny somehow.

When people can't balance their checkbooks at home, they worry about their future.
Bush didn't give a shit, he just left the problems up to the next President to solve.
And now McConnell and Boehnor are fighting him tooth and nail against coming up with any solutions at all.

Welcome back to DU.

[Blecht]

36. The problem begins with the subject line of your original post

There is no real "national debt crisis." Framing things like this is what teabaggers do, and a Democratic message board is no place for this crap.

[Major Hogwash]

39. $14.3 Trillion dollars in debt, and that's not a national debt crisis to you?

Christ, where do guys like you come from?

[Broderick]

30. scary

[jmowreader]

37. You're missing something huge

The way the government spends money is far, far different from the way a middle-class family spends it.

IF the tax system was properly set up, and not distorted by Republicans who buy votes with tax cuts, the government would spend $38,200, and the people who received it first would pay taxes on it. Those people would have to pay suppliers and workers who would pay taxes on their share, the people the suppliers and workers paid would pay taxes on it...eventually, all the money the government spent would return to it as taxes.

The problem isn't that the government spends money. (The government NOT spending money is a worse problem! Government spending has a multiplicative effect.) The problem is taxes are too low to support the level of spending the government needs to do.