Saturday, November 26, 2011
Deficit Spending in Simple Terms
A friend sent me this a month or so ago, I love it when complex things are simplified so that we can all understand.
The lunacy of the Congress’ inability to understand economics is, in my opinion, the largest threat to the US in the last 20 years.
The current US Budget (although officially our current President hasn’t submitted a budget) is a mess:
•Income to the U.S. Treasury: $2,170,000,000,000 ($2,170 Trillion)
• The Money Congress spends each year $3,820,000,000,000 ($3.820 Trillion)
• The yearly deficit (money we don’t have) is $1,650,000,000,000 ($1.650 Trillion) So we have to find a friendly banker to loan us the money, so let’s just assume for the sake of simplicity that we have a really high limit Visa card that we use to get the additional cash advance each year to pay for all that extra stuff.
• The problem is that the National Visa Card already has a balance due of about $15,000,000,000,000 ($15 Trillion) since we have been overspending for a very long time. But hey we have good credit so adding another $1.65 Trillion to the bill is not a problem.
• Our brilliant President and Congress decided, that the country should really cut its spending, so they formed a Super Committee to figure out how they could cut $120,000,000,000. Of course the Super Committee couldn’t figure this out, it was just too hard for them to make such a large cut. And $120,000,000,000 ($120 Billion) is a lot of money but to put this in the perspective that all of us could better understand, let’s remove 8 zeros from each number and pretend it's a household budget.
• Annual family income: $21,700
• Money the family spent: $38,200
• New debt on the credit card: $16,500
• Outstanding balance on credit card: $150,000
• Total budget cuts: $1200
Just how long can any family that you know of continue this irrational financial management? Can the USA be far from financial collapse if we do not get our spending under control? You be the judge, and vote accordingly!