Family budget vs U.S. budget

[ashling]

Its the same old tired mantra: A family would sit down at the dinner table and balance their budget,

I usually pass that up, but a friend of mine commented on a facebook comment that went like this:

Understanding the budget that was passed: "If the US Government was a family, they would be making $58,000 a year, they would spend $75,000 a year, & are $327,000 in credit card debt. They are currently proposing BIG spending cuts to reduce their spending to $72,000 a year. These are the actual proportions of the federal budget & debt, reduced to a level that we can understand." - Dave Ramsey. (Now do you get it?)

Someone else posted this comment to it:

The budget for this same family was running in the black, accumulating savings in 2000 and had the chance to pay off the credit card in the reasonable future; instead it took two paycuts in 2001 and 2003, squandered its savings, and charged two two wars to the family credit card.

my friend added:

Don't forget the dot-com-bust recession and the New Depression. Meanwhile, work is taxed progressively but wealth isn't. Ask Warren Buffett

[eleny]

1. I think the last time I learned about families raising armies to go to war...

was in European history books.

I rest my case about the family-nation analogy.

[elocs]

2. Right, how much of a big chunk of their income does the average family spend on defense? n/t

[hughee99]

3. So the current problem with the budget is NOT

that the government has been and continues to spend far more than it takes in? I thought that's why they had to increase the debt ceiling again. Clearly, I've been misinformed.

[dawg]

5. You could just as well say it takes in less than it spends.

Taxes as a share of GDP are at levels not seen since before the 60's. There's no way we can run a modern society on less than 16% of GDP. There is literally no other rich country in the world attempting to do that.

[hughee99]

6. You could absolutely say that.

And while there's tons of differences between a family and governmental budget, at least one general concept is common to both. If you plan to send out more money than you take in on a continuing basis, you're eventually going to have serious problems.

[dawg]

7. Basically true, except ...

Governments can consistently run a deficit so long as it averages less than the growth rate in GDP. In fact, it's probably better if they do.

When family budgets are way out of line, it can be helpful to compare their budgets to other families. In our case, the comparison would be with countries like Germany, the UK, France, Japan & Canada. Compared to those countries, our social programs are absolutely stingy. Our defense speniding is excessive, but not enough to cause serious problems considering the size of our economy. The real killer is revenue. We are trying to run a 21st century society on 19th century revenues. It isn't possible.

[hughee99]

9. I have no issues with increasing revenues,

I'd just like to see spending more in line with revenues than they are now.

[dawg]

11. When you back out temporary spikes for items like unemployment ...

and food stamps, spending is actually very much in line with the share of tax revenues that would be generated by the tax code in effect when Clinton was President.

Make it through this little depression, and repeal the Bush tax cuts, and you would be much closer to balance. The difference could be made up by passing further health reforms, because medical-inflation is the major driver of the long-term deficit.

What you cannot do, is pass tax-cut after tax-cut, and when they cause deficits, try to make up the difference by cutting vital progams that help the poor and middle-class.

And I am no lover of high taxes, nor do I favor punitive taxes on the wealthy, but something somewhere has to give. And the numbers are clear. Our long-term deficits relate primarily to health-care issues. The ACA actually helped reduce the deficits, but more needs to be done. Our short and medium-term deficits are primarily caused by deficient revenues.

[suston96]

4. But how many families could have a home, buy a car, pay for kids education.......

....and other such stuff, if they didn't go into debt.

Debt is about the ability and willingness to pay, AND the credit record of the debtor.

When was the last time the United States flat out did not pay its just debts?

In the immortal words of Donald Trump: Debt is good! I like it. That's how I got rich. And I never went bankrupt.

[Yupster]

10. But you buy a house

and then slowly pay it off over 30 years.

You don't buy a new house with a new mortgage every year and let the mortgages accumulate.

[Emelina]

8. Forgot one important difference.

If your hypothetical family went out and waged war all over the city and expected their grandchildren to pay for the debt for buying the supplies, then you would have an accurate analogy of what our government is doing: http://www.youtube.com/watch?v=_MZCHjGkTPg&feature=related

Yet with their personalities one can not expect much of a change.