The new US Budget has come out, and needless to say it looks like it is more of the same old thing. Not enough revenue, too many expenses, let's borrow some more, and give the can a good kicking. Who are the kicking the can to? That's what I am asking myself. Our kids, your kids, anybody's kids. Let's just let the following generations handle the balance the budget thing. My take is that revenue is about 2 trillion, expenses are about 3.6 trillion, and the US Govt borrows 1.6 trillion on our behalf. Did they even ask us if we want to repay the debt they are taking in our behalf? Don't worry, we're not really on the hook for that much as Ben "Hanky Panky" Bernanke is really going to electronically create most of that. My guess, probably about half. So, debt now is 14.1 trillion, yes you read that correctly, and by next Halloween, it should be around 15.7 to 16 trillion. I think I'll dress as Ben next year for Halloween as that will be the scariest face I can think of. 16 trillion scares me, why not put a face on a number.
So, I was thinking about what if the federal government had to run like your household budget? Here we go. Let's see, revenues...about 50 thousand. Expenses ... 90 thousand. Gosh, I've got to make some more dough, or seriously cut my expenses. If I cut back on expenses, boy are my wife and kids really going to moan. They'll make my life a living hell. They really hate it when I tell them I have to take stuff away. They'll say, well you've given us all that stuff before. WE'RE ENTITLED!! Ooh, that might be a problem. Where can I get some extra cash? Hmmm...the bank, yes that's it. What do I tell them?
Say, I'm a running a little short this year, you think I could, you know, borrow some money? "Sure", they say. "Do you already have a loan with us"?
"A little", I say. "You gave me a little personal loan".
"How much is that, sir?"
"Well, it really wasn't much the first year. Small change, second year, it was a little more. Year three, well somewhat larger as I needed all those electronic gadets. Heck, what's life without a 80 inch TV? Right? And years four through 8 sort of increase from there. Total...hard to say, but I think it's pretty reasonable. About 352 thousand. Yeah, that sounds about right. So, how bout another 40 thousand. I mean why cut me off now, we're on a roll?"
If I'm living in the US govt fantasy land, they say "Heck why not". In the real world, they either laugh hysterically or they become hysterical and throw me out the door. But that about sums up the US finances right now. Divide current debt of 14.1 trillion by US revenues of 2 trillion, and you get a factor of a little over 7. In my story I had revenues of 50 thousand a year, so I'd have debt of 352 thousand (50k * 7.05). Do you see how crazy this is? Nowhere but in government could a group of people ignore the obvious, and pretend that this is just the normal course of business. If you look at the ten year plan put out, there is not a single surplus. We just keep adding debt. If these were your personal finances, what would happen? Well, unless you hit the lottery, you are on a fast track to bankruptcy. Wake up everybody because that bell you're hearing isn't the dinner bell, it's the all hands on deck call, cause there is a whopper of an iceberg ahead, and we're headed straight for it.
Oh, and that 14.1 trillion is really understated. By how much? Plenty of opinions out there, but probably understated by about 70 - 100 trillion. More on that another day.
Until the next time...
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