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What If the National Debt Were Your Debt?

The U.S. federal government collected $2.2 trillion in 2011. This includes revenue from all sources. Also in 2011, the federal government spent $3.8 trillion and was $14.6 trillion in debt.

These numbers are too big to comprehend, so economics professor Antony Davies presents the government’s fiscal situation scaled down to the level of an average household. He shows what spending on debt would look like if the government’s revenue were $50,000 instead of $2.2 trillion.

If you spent the way the government does, you might be contemplating bankruptcy. What should be done to ensure the U.S. government gets its fiscal house in order before it becomes impossible to pay the bills?

What If the National Debt Were Your Debt?

According to the White House Office of Management and Budget, the federal government collected $2.2 trillion in 2011. That includes revenue from all sources: income taxes, payroll taxes, corporate taxes, excise taxes, estate taxes, tariffs, and all other sorts of taxes and fees. Also in 2011, the federal government spent $3.8 trillion and was $14.6 trillion in debt.

These numbers are too large to comprehend. Let’s put the federal government in perspective. The average American household earns about $50,000 a year. Now imagine if the federal government were the size of an average household. In 2011, this household-sized government would have spent almost $88,000, or $38,000 more than it earned. That’s like the household spending its entire income and then buying a brand new SUV. If the government spent all of its money, how did it pay for the SUV? It used its credit card.

Last year, the government spent all of its money plus $30,000 more. That’s another SUV. And it did the same thing the year before that. Our household-sized government has been spending more than its $50,000 income for a very long time. In fact it has racked up a credit card balance of $320,000. The government currently pays about 3 percent interest on its loans, so that means that our household-sized government racks up about $10,000 a year in interest.

Now imagine if you earned $50,000 this year, spent $88,000, and had $320,000 on your credit card, that charged you an additional $10,000 a year in interest, you might be contemplating bankruptcy. Our government is no different. Our government has demonstrated that it can’t be responsible with its credit card. It’s time to take the credit card away, before it becomes impossible to pay the bills.

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