The Personal Cost of Spending

January 21, 2010

The White House says that the government will spend $3,766,000,000,000 in 2010.

What does that number mean to you and me?  Absolutely nothing. It is way too large to comprehend.  However, if we break this number down per person it begins to make sense and you might not like the results.

$3,766,000,000,000 in government spending is roughly $12,000 per person in the country.

In order to pay for this, government will collect $2,264,000,000,000 in taxes.  This amounts to $7,300 per person.

This sounds like a good deal, right?  On average, you’re paying (on average) $7,300 and the government is spending $12,000.

The reality is that the missing $4,700 per person is not free.  This overspending will have to be paid for at some point.  There are two options for making up the difference: cutting spending or raising taxes.  Cutting spending makes far more sense economically – the government often spends money very inefficiently and provides poor services (think of the DMV).  Raising taxes would have a very negative effect on the economy – this would decrease people’s and businesses’ incentive to work, save, and invest.

Besides, most people would probably not want to pay $12,000 for $12,000 in government.  Can the government spend your money more effectively than you can?

The bigger problem: all of the previous years in which government has overspent and never collected the money to pay for it.  That overspending amounts to $39,700 per person.  At some point in the future, this liability will have to be paid off.  In the meantime, Washington’s voracious appetite for spending must be restrained in order for our country’s economy to grow robustly and create sustainable jobs.

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3 Responses to The Personal Cost of Spending

  1. Lee says:

    While I am in favor of drastically reducing government spending and the ovrall size of government, this article and the argument it make is missleading for several reasons. Governments, like corporations are artificial persons. As a composite, souless entity it will live forever in one for or another. Having said that, there is no requirement for a government to ever free itself from debt entirely (same as a corporation). The only requirement is to keep the ratio at a level that allows the debt to be serviced (again technically). So the idea that each man, women and child is strapped with a debt of anything more than the debt service of a specific moument in time is simply overstated.

    The next point is that to even articulate the national debt in terms of per capita is to miss the entire point. Because our tax code is overly progressive, the fact is that a per capita repayment of debt, or even debt service is a rediculous thought. The reality will be that a very small segment of the U.S. population will service the debt. The others will contribute little, or even get a free ride. The reality is that some of us will pay far more than $39,700 and others will pay far less, or nothing at all.

  2. Lee says:

    While I am in favor of drastically reducing government spending and the ovrall size of government, this article and the argument it make is missleading for several reasons. Governments, like corporations are artificial persons. As a composite, souless entity it will live forever in one for or another. Having said that, there is no requirement for a government to ever free itself from debt entirely (same as a corporation). The only requirement is to keep the ratio at a level that allows the debt to be serviced (again technically). So the idea that each man, women and child is strapped with a debt of anything more than the debt service of a specific moument in time is simply overstated.

    The next point is that to even articulate the national debt in terms of per capita is to miss the entire point. Because our tax code is overly progressive, the fact is that a per capita repayment of debt, or even debt service is a rediculous thought. The reality will be that a very small segment of the U.S. population will service the debt. The others will contribute little, or even get a free ride. The reality is that some of us will pay far more than $39,700 and others will pay far less, or nothing at all.

  3. Lee says:

    While I am in favor of drastically reducing government spending and the ovrall size of government, this article and the argument it make is missleading for several reasons. Governments, like corporations are artificial persons. As a composite, souless entity it will live forever in one for or another. Having said that, there is no requirement for a government to ever free itself from debt entirely (same as a corporation). The only requirement is to keep the ratio at a level that allows the debt to be serviced (again technically). So the idea that each man, women and child is strapped with a debt of anything more than the debt service of a specific moument in time is simply overstated.

    The next point is that to even articulate the national debt in terms of per capita is to miss the entire point. Because our tax code is overly progressive, the fact is that a per capita repayment of debt, or even debt service is a rediculous thought. The reality will be that a very small segment of the U.S. population will service the debt. The others will contribute little, or even get a free ride. The reality is that some of us will pay far more than $39,700 and others will pay far less, or nothing at all.

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