Without a serious reality check on government spending, the United States will endure economic hardship that will make the Great Recession seem like a joyride.
Think of the enormity of one billion (1,000,000,000) of a given item.
For the 2011 budget, we will manage to spend $3,800 billion, compared to $2,200 billion of revenue.
Running a $1,600 billion annual deficit, coupled with a $14,300 billion overall debt, is downright shameful. Our deficit and debt are incomprehensibly large.
For perspective, imagine developing a budget for you and your family. Through past excesses, you currently have $143,000 in credit card debt. Your take-home pay this year is $22,000, but you will spend $38,000.
Furthermore, imagine that you should be saving money now to pay for your kids’ college education in the future. This major expense can be compared to entitlement programs for retirees, which have not been paid for. If anything, you should be running a major surplus now to retire existing debt and save money for college. Unfortunately, this household is hemorrhaging money without caring about consequences.
Clearly, this cannot go on forever. Your lender is getting anxious and will raise the interest rate as you become less creditworthy.
This action will increase your expenses further and could lead to a suffocating debt spiral.
Any sensible person would consider this situation and try to stave off ruin by paring back expenses from $38,000 to around $30,000 at most.
Of course a different approach is to disparage cuts that would reduce your $143,000 debt by a whopping $600, which is equivalent to the liberal position during the recent budget negotiations.
You would be appalled by the fiscal recklessness of this household and would urge a complete overhaul of expenses to prevent financial doom. Yet our country’s state of affairs is equally terrible. Curtailing spending to the levels of just three years ago, which in fact ties to $30,000, would be a completely reasonable and necessary first step.
Like any household, we must determine our absolutely essential expenses and spend little more in order to shore up our finances. We cannot shirk this responsibility, or we will succumb to a devastating crisis beyond anything we desire to comprehend.
Source: http://reddogreport.com/
Very well written Kevin. The household analogy really brings some meat to the argument- however, I would say that to complete this analogy, it becomes even more outragous when you consider that the teenagers are essentially calling the shots, none of the adults seem willing to speak to each other or enforce any rules or limitations, and there are absolutely no consequences to speak of when the kids steal the credit card and rack up a massive bill at the mall. Wish I had that kind of monetary freedom growing up! Haha.
ReplyDeleteKeep up the good work!
Brandon Malloy
Who is out debt to? Is it mostly China, as I've heard? Does it matter the location of the debt? What good would it even do to pay it off? Who cares about a debt if the person owed money isn't asking for it? Or are they?!
ReplyDeleteThanks, Kevin. Good job!