Six Signs You/Washington Have Too Much Debt
Last week the Huffington Post ran a blog which touching on six signs of when you may have too much debt. We decided to take these signs and bring you the Washington equivalent.
You: You are constantly using overdraft protection or your bank account is frequently in a negative status.
Washington: Instead of using overdraft protection, Washington runs deficits that they agree to pay back later. Washington has had a “negative status” on their account for the last 40 months.
You: You have no savings or emergency fund.
Washington: Washington uses trust funds, such as the Social Security Trust Fund, to hold money for future claims. Unfortunately, Congress has always spent surpluses in these trust funds and replaced that amount with government bonds. They then use this money for bills that are owed today, essentially leaving an IOU for the money borrowed.
You: You have no discretionary income.
Washington: During fiscal year 2011, 56% of revenue for the federal government was used in mandatory spending for programs such as Social Security and Medicare, with about a third of revenue for discretionary use. Instead of staying in their budget though, Washington runs deficits and borrows money to pay for discretionary programs. Much like using a credit card without a limit on spending.
You: You have taken out a payday loan.
Washington: The National Debt is $15,517,794,642,311.25. This is the ultimate payday loan and we are continuing to add to it with each deficit we run.
You: Borrowing from one creditor to pay another.
Washington: As mentioned in number 2, legislators have been “borrowing” money from Social Security for years to pay off their bills. This means that tax dollars meant for Social Security could go towards paying debt and interest owed to China.
You: You pay your bills late because you don’t have any money.
Washington: Every time Congress raises the debt ceiling, the maximum amount allowed to be borrowed at any one point, they borrow more money so they do not run out. We are constantly running out of money, and now the Treasury Department says we may need to increase the debt ceiling again before the end of the year.
The above signs are simple and anyone who is deep in debt knows it. In Washington though, legislators continue to ignore the reality of the situation. By not recognizing the problem, Congress has put us in the situation we are in today- a path to follow Greece into default. Hopefully, Congress can learn from American families that have tightened their belts and reign in spending soon. (Click here to view our Working Hard video.)