In a must-read story, The Washington Times this morning uses the analogy of a family budget to put in perspective the nation’s budget crisis:
In their paper “Growth in a Time of Debt,” economists Kenneth S. Rogoff and Carmen M. Reinhart argue that advanced economies tend to see economic growth stagnate when their ratio of debt to gross domestic product (GDP) exceeds 90 percent.
According to just-released numbers from the U.S. Bureau of Economic Analysis, our debt just hit this red line: The bureau’s estimate for the nation’s second-quarter GDP is $14.597 trillion, while our total debt is $13.302 trillion. That gives us a ratio of just over 90 percent.
And we show no signs of slowing down.
Besides sounding ominous, what does it really mean?
Today, the United States is like a family with a very big mortgage, right at the edge of being able to pay its other bills. On the outside, things look pretty good. We’ve got a nice car, a swimming pool and a big-screen TV that’s the envy of the neighborhood. But at the end of every month, there’s just not enough money to go around, so we borrow a little more or defer paying off our debts. It’s a vicious cycle.
Defaulting on a home loan is painful enough, but defaulting on a nation’s debt? That’s a disaster of unthinkable proportions. We are rapidly approaching a point where we have never been before. Congress must take bold action now to stop promising benefits we can’t afford and spending money we don’t have.
Click here to read the full article.
I’m terribly sorry, but I must correct the article writer here.
Despite all belief to the contrary, GOVERNMENT IS *NOT* A HOUSEHOLD AMONG HOUSEHOLDS.
When authors use the “household” analogy comparing GOVERNMENT SPENDING to Household spending,
in attempts “instructing” readers how government SHOULD behave with the revenue they receive, they are completely disrespecting the reader’s intelligence, and performing a grave disservice to their education, as well as continuing and reinforcing this lie.
Consider this question: Can a household (apparently among other households) impose taxes on financial transactions, between all households? No. Only a Government can.
Can a household maintain a standing army or navy? No. Only a Government can.
Can a household barge into another household and lay seize to members of that household? No. Only a Government can.
Can a household impose laws that all households must follow or face severe penalties? No. Only a Government can.
Therefore, this faulty thinking keeps continuing because some OTHER entity profits from this.
Shaking off this “household among households” belief must be the first step to overcoming this “National debt” problem.
The metephor he used is a fine analagy. Even for us “intelegant” readers.
A household has revenue, the income from the breadwinner. It maintains a military: the vehicles that the family drives, The guns that the family owns, The nice chainlink fence to keep dogs out, the nice alarm system.
The analagy works if you think about it. And it is TRUE!!!! Think about people Please really think about it… Who decides when a creditor is no longer willing to work with the family and calls in the debts???? THE CREDITOR. The family/government DOES NOT decide where the red line is. Who does america owe money to? Other than intself?
Please think about it. When a bank calls in a debt on a home and forcloses after 10 years of payment. Who normally benefits???? THE BANK!!!!!! The countries that are going to forclose on america stand to gain TREMENDOUSLY if america bankrupts. Becuase they when we bankrupt, and start to starve(financially), They WILL just take what is legally theirs, just like the bank takes the house, or the car.
So what can be done????? STOP OVER SPENDING!!!!!!!!!.
The household must find ways to cut back. To bring the budget back to balance. Must give up things it holds dear in order to save thigns they hold more dear LIKE FREEDOM!!!!
Our president is of a nationality that REALLY REALLY stands to gain if america bankrupts. GET RID OF HIM!!!!!!!!! He is a traitor. He should be hung for treason. If he successfully bankrupts us as he is trying so hard to do, They will have finally succeeded in what decades of terrorism failed at.
Think about it. We can’t decide when….BUT WE CAN CHANGE…BEFORE IT IS TOO LATE…
My household income is down $15,000 annually and so I have made the necessary adjustments accordingly to keep my ship afloat. Shouldn’t our elected officials be doing the same? Just as another article on this website read “Congress cost the Americans $107 million this week…,” this is absurd. Not only do we need to impeach the president but we also need to get all of the career politicians who are paid these exorbitant salaries to “represent” the American people out of office. No seat should be held over a period of eight years. Perhaps then we will have citizens in office who are truly concerned about the state of our country, not how fat their wallets can get. The present state of our used-to-be great nation is disheartening and disgusting.
In response to Randall:
You said, “…the countries about to FORCLOSE ON AMERICA…”
tell me something, Randall (even though I know It’s been over a year since you last wrote your comment….)
LEt’s say your France, and you want to Forclose on America…you have your bonds from them, and you’re getting your yields.
Now, Many times before, when maturity time comes around for any of those bonds…you present them to get MORE BONDS…(and therefore, more YIELDS, correct?)
PAUSE! RESET!
(Good God, I don’t even know why I’m debating a man who can’t even spell “intelligent”…let ALONE over a full year later….)
Randall, you wish to keep swallowing up the “household among households” analogy…FINE. There are too many among us, who are MORE than willing to shove it down your willing and eager throat, just to keep making a buck off you. If that’s how you want to keep wasting your time and money…then that’s just FINE….
As for me, I want my country out of debt. Becuase out of debt, means CONSIDERABLY LOWER TAXES off my back, and everyone elses.
And I know that GOVERNMENT has certain features and properties about it, that makes the “household analogy” completely ILL-FITTING, and WHOLLY INADEQUATE…
and this is probably one of the more damning reasons why we can’t GET THE DEBT OFF OUR BACKS: no one wants to see government for what it truly is….REGULATED FORCE.
and a household among households is not REGULATED FORCE.