4.20.2011

Understanding Congress’s solution to the federal deficit problem

Understanding Congress’s solution to the federal deficit problem

News accounts on the latest federal budget deal gave the numbers in a vacuum, e.g., “The deal cuts $38 billion from last year’s budget. It’s being called the largest domestic spending cut in U.S. history” (source). How can an individual voter make sense of quantities that are ordinarily written in scientific notation? I think the easiest way is to divide everything by 100,000,000 (10^8).

Let’s start with federal spending. The FY 2011 federal budget is approximately $3.82 trillion (3.82×10^12). Of that, approximately $2.17 trillion will be paid for by taxes collected and the remaining $1.65 trillion will be borrowed from our grandchildren. If we divide everything by 100 million, the numbers begin to make more sense.

We have a family that is spending $38,200 per year. The family’s income is $21,700 per year. The family adds $16,500 in credit card debt every year in order to pay its bills. After a long and difficult debate among family members, keeping in mind that it was not going to be possible to borrow $16,500 every year forever, the parents and children agreed that a $380/year premium cable subscription could be terminated. So now the family will have to borrow only $16,120 per year.

Comment: HT: Paleoevangelical

1 comment:

  1. Thats great way to look at it. Unfortunately, I don't think congress does. I think at this point, they really only care about retaining their jobs. If they cared about balancing the budget, they would absolutely lose their job next election because they would have to decrease or cancel a lot of the entitlements. It really is the only way to balance it. But when that happens, one can kiss their job good bye.(if their supporters were primarily people taking entitlements)

    Taking my small savings and moving to S America is beginning to sound very nice.

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