If you make $40,000 a year but spend $50,000

[jschurchin]

How many years till you are completely broke?

I'm just curious. It seems there are people that are all giddy because we "won" the budget debacle. Personally, spending $1.5 TRILLION MORE then you bring in is NOTHING to be happy about.
There are a couple of groups who are benefiting the most from the 535. Large Corporations and Large Financial Institutions. They both get the 535 to write bills that benefit them tremendously while handing the cost of running the country to me and you.

Folks we are in deep, deep doo here. Unless we can find people to represent us, instead of Them,
WE ARE FUCKED.

[forty6]

1. The problem only comes in two ways or at two times:

1) When no one will buy your debt, (bonds, T-bills, etc) We have never reached that point, but COULD reach it if the debt ceiling is NOT increased by Congress, ... at which time credit for EVERY AMERICAN, personal and corporate will become TWO TO THREE TIMES AS EXPENSIVE as it is now....(lighting off an inflation sparked recession of major proportions).

OR

2) When the government cannot collect enough money in receipts to pay for the debt service, (interest and principle payments on the bonds, etc.)as well as for the goods and services the government buys without using more debt.

The last time a Republican President sat on a budget surplus, (spent less than income), was Eisenhower.
The last time a Democrat President sat on a budget surplus was Clinton.

In BOTH of those times, we STILL BORROWED MONEY to run the government, buy stuff, pay elderly, etc. We just didn't spend everything we collected in taxes and borrowed, so the amount of borrowing went DOWN by a few billion (200 or so under Clinton, don't remember Eisenhower's surplus, but back then you could buy a loaf of bread for a quarter.

Which brings me to my LAST point, inflation has a way of making the national debt look smaller and smaller... and inflation will be the ONLY way we ever master the debt to reasonable levels. But society is MORE stable with LOW inflation, so it's a conundrum...more debt and less inflation, less debt and more inflation one or the other.

[zorahopkins]

17. I Remember Inflation and High Interest

I remember inflation and high interest from about 30 years ago.

It was NOT fun.

[Angleae]

19. Actually, Clinton never had a surplus.

The debt increased by 17.9 billion his last year, therefore no surplus. However, it was damn close. Eisenhower didn't either. It's actually Truman (1948) and Hoover (1930).

[xoom]

2. not a good situtation to be in..

[lumberjack_jeff]

3. When your spouse who refuses to work threatens to burn the house ...

... unless you stop wasting money feeding the kids, a solution which keeps the kids mostly fed for another year is arguably a success.

Perhaps the hypothetical household should reconsider the $18,000 salary that it donates back to its employer.

[forty6]

7. An excellent analogy! Tea baggers are threatening to burn down..

the house...(the House)....and want to keep paying taxes to support oil companies, farm subsidies, guarantees on nukes, etc.

[SheilaT]

4. It's not as though there hasn't been a huge

decrease in taxes on the wealthiest Americans, and a distinct lack of collecting taxes from large, highly profitable businesses.

If I only make $40,000 a year, I don't have a lot of good ways, probably, to increase my income. Maybe I can work overtime. Maybe I can get a better job. But our government has been systematically giving away taxes to those most able to pay, and have taken on several wars -- three at last count -- that eat up far more of our collective income than they should.

Start by rolling back the Bush era tax cuts. Next, stop going to war. Then cut the pay for the members of the House and Senate, which I know wouldn't be that much of a savings, but the symbolism would be powerful.

After that, we could look at other things.

This country had its best prosperity in the 1950's, when top marginal tax rates were up to 90%! Ninety freaking percent! We built the interstate highway system. We sent a man to the moon. We built a strong public education system. Lets go back to those days.
But lets NOT defund the social safety net.

[girl gone mad]

5. Bad analogy. The federal govenrment doesn't operate like a household.

The federal government is literally the creator of our money. As such, they are not restrained by debts.

[forty6]

10. Not quite right on all counts, but yes, it's a bad analogy for other ..

reasons.

First, in a household the income will go from $40k to $500K in 30 years, so debt of $10 K now is not significant, as long as the household buys what it needs to get to the day the income will be 500K

For the "household" of the USA, that includes educating a few tens of millions college grads, feeding all the 3 year olds who will later be college grads, providing for all the grand-ma's and pa's of the household, innoculating against all diseases, now and in the future, keeping more family members well enough to work and contribute and not die off early, etc.

As for the "government produces the $" well they produce the way we exchange goods and services, through a system of laws, and medium of common exchange, rules and policies which bend and extend when needed, powers granted to some to hire others to do productive work, to protect and educate and inspire the people in the "household" etc.

[badtoworse]

18. You are overlooking a very important point.

The reason the government can do that is because the dollar is the world's reserve currency. If the dollar loses that status (say we have to buy oil in Euros, Yen or some basket of currencies), then the value of the dollar will drop like a rock if we just print more money. We would be totally screwed if that happens and it will if we just keep printing money.

[girl gone mad]

22. There is no direct relationship between our spending and the value of the dollar.

The yen is not a dominant reserve currency. Japan's debt is more than twice their GDP (much higher than ours), but the yen has been stable and Japan has experienced two decades of deflation.

As long as there is so much slack in our employment and productive capacity, we will not face significant inflation. Inflation happens when demand rapidly outpaces supply. It isn't solely a function of the monetary base.

Currency revulsion is a different matter. People might reject the dollar as a reserve currency, but as long as our taxes must be paid in dollars, the dollar will retain value.

I don't think that the rise in commodities and oil is a sign of inflation. In my opinion, it's just another speculative bubble created by stupid Fed policies. The real demand is at the top, among the investor class, because they have been given access to an easy supply of money and they have a limited supply of viable investment strategies.

[frazzled]

6. Governments are not people

In the same way that corporations are not people.

Still, I agree that we must plan for future deficits, which are growing mostly due to costs of medical care. But that was not the issue in this budget debate. We CAN run deficits right now (and probably should). The short-term deficit is not a problem.

It's the long term deficit that is the next big issue (and which Obama addresses on Wednesday). Again, Health Care is the main issue here. The Affordable Care Act, if fully implemented, should take care of a lot of it. Letting Bush tax cuts for the wealthy expire will take care of some more. A "doc fix" (changing how we pay doctors in Medicare) is the third, and perhaps most crucial element. And the hardest.

[formernaderite]

8. you know what I'd like people to look at

Is the fact that blue states send more to the feds than red states...and the red states REAP the benefit. All this talk about cutting... let's cut off some of their support money.

[forty6]

11. Some "red" states turned "blue" in 2008... more will follow, as we

see racists die off, have more college grads, etc.

[former9thward]

21. I guess you left off the 2010 results.

Blue states turned red.

[coalition_unwilling]

12. It's worse than that in our so-called "democracy." A state like

California has two U.S. senators, while a pissant Repuke state like Idaho has . . . two U.S. senators. Thus, Idaho gets way more per-captita weighting in the U.S. Senata than California does, even as California massively funds the U.S. government while Idaho and its Repuke cousins profit from the taxes of Californians.

You can thank the South and slavery for that peculiarity of American politics. Totally and utterly ridiculous.

[hfojvt]

9. depends on your net worth

suppose you own a $500,000 house and suppose further that this house was increasing in value by a modest 2% per year. Well, at that rate you could take in $40,000 and spend $50,000 indefinitely. Further, if you presume that at least $15,000 of the spending is for maintenance and upgrades to the house, then it becomes important to go into debt to maintain the valuable property rather than letting it deteriorate in the name of austerity.

[karynnj]

15. Fantastic answer!

[karynnj]

13. It depends

If you were given a trust fund of $1 million when you turned 18, you would never go broke unless you lived past 118. This assumes you put the money under the mattress and earned nothing on it - and spent exactly $50,000 while earning exactly $40,000 - no matter how much the value of money changed.

If you start with zero, you are completely broke sometime within the first year - depending on when you earn and spend the money.

[JuniperLea]

14. We were already fucked the minute Bush left office...

And nothing any human being could have done would have corrected those grave errors between then and now.

Yes, we are fucked. Obama didn't fuck us. He may not have donned the magic tights and cape and fixed everything, but if that's what was expected, not only are we fucked, but we're fucking stupid as hell too.

[jschurchin]

20. I agree completely

This has nothing to do with President Obama, never did. The President submits a budget Proprosal, the 535 determines the spending.

[Shagbark Hickory]

16. The thuglicans didn't want Obama to get credit for balnacing the budget. nt

[aikoaiko]

23. depending on APR, you can do about 2-3 times your yearly income before going broke.

:-)

[killbotfactory]

24. The US budget doesn't work like the budget of a family or business. nt

[CreekDog]

25. Yes, thanks to my mortgage, I owe more than I bring in each year

so what. :eyes:

[True Earthling]

26. It's actually more like making $40,000 and spending $44,000

The projected deficit for 2011 is 10% of GDP.

[taught_me_patience]

27. Wrong. GDP is a measure of total economic production NOT government income

Government will probably spend about 3.6T but collect about 2.1T in taxes and other income. It's like making 40k and spending 68k.