The Federal Budget and Family Budget

I recently read a letter written by a Louisiana attorney regarding the US Federal Budget to put the recent budget cuts into the proper perspective.  Please review the breakdown below:

• U.S. income: $2,170,000,000,000
• Federal budget: $3,820,000,000,000
• New debt: $1,650,000,000,000
• National debt: $14,271,000,000,000
• Recent budget cuts: $38,500,000,000 (approximately 1 percent of the budget)

In order to put these figures into amounts we can relate too, he removed eight zeroes from each figure and pretended it was the household budget for a fictitious family.  We will refer to them as the "Jones" family.

• Total annual income for the Jones family: $21,700
• Amount of money the Jones family spent: $38,200
• Amount of new debt added to the credit card: $16,500
• Outstanding balance on the credit card: $142,710
• Amount cut from the budget: $385

The amount cut from the annual budget was not exactly significant.  These figures do not tell the us the entire story, due to entitlements that are not included in the above figures.  Social security and medicare will drastically increase the debt figures to an amount completely unsustainable. 

The burden of these disastrous decisions fall onto the 52% of Americans that pay annual income taxes.  The politicians do not seem to act a fidiciaries for the American public.  The only way to keep elected officials accountable to vote them out of office.  This can be an extremely difficult task, if they have excellent fundraising, or a constituent base that is satisfied with their politician.  Politicians are not forced to make sound financial decisions, as long as their are bringing home federal money and projects to their home state.

I firmly believe that if we were to force our politicians to operate as a business, with the taxpayers being the shareholders, the U. S. governement would not have annual budget deficits or an enormous amount of overall debt.  We should not expect anything less from our government officials, than they expect out of business owners.

I recently heard an interview on CNBC with my elected congressman, James Lankford.  He was praising the recent debt increase saying it was a victory for the American people.  If the figures above are remotely accurate, I don't see how the new debt ceiling increase can be viewed as a victory for anyone.  If borrowing more money that can't be repaid is the ultimate goal, then we will definitely be the victors.  However, if we are concerned about our future as a country, and the liabilities we are leaving to our children, the recent debt ceiling increase is an absolute embarrassment, and should be rescinded immediately.

If you do not know how your representative voted on this bill, please check it out.  If you are not pleased by his or her vote, I would urge you to send a note to Washington DC to let them know we are not happy with the "so called" changes.

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Debt Ceiling Increase Considered a Win for American People

The Oklahoma 5th district congressman considers the new debt ceiling increase a win for normal American citizens.  I really don't share his enthusiasm, or see how increasing current government spending without significant cuts to the US budget can be considered a victory for the American people. 

Rep. James Lankford happens to be the congressman in my district.  I recently sent him an email stating my disappointment that he voted for this increase.  I would like to get his logic or rationale on how increasing a credit line for a near bankrupt country would be sound advice under any circumstances.  I can't imagine any banker increasing a credit line for any person not living within their means.  It just doesn't make any sense.  If Rep. Lankford is confused on the bill, and is not sure if it will benefit the American people, he can look over Rep. Pelosi's shoulder to see how she is voting, then vote the opposite.

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The debt ceiling vs. US dollar

In this video clip, Peter Schiff discusses how we can avoid raising the debt ceiling by making common sense decisions.  The USA has enough money to service the interest payments on all current debt, so default on the debt isn't the underlying issue...prioritize spending, however, is. 

The USA has refused to make the necessary cuts to the budget, which would reduce the annual deficit and total debt.  Peter Schiff believes that raising the debt ceiling by any amount only prolonges the issue. As a result, the USA may eventually default on payments because of their current policy actions. 

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