Charge It

It appears that the President’s State of the Union speech will deal in large part on the economy, budget deficit and sequester cuts. Commentators and writers will pontificate on the president’s proposals, and lively debate about what the Left and the Right want to do (or not do) will surely ensure. Do not allow yourself to be hoodwinked if you tune in to the speech or the after-speech analysis. The main thing to keep in mind is that if you ran your household the way politicians run our government, you would have some very serious financial problems.

To put this issue into context, let’s assume that back in 2003 a family of 4 earned $60,000  but spent $72,000, putting their excess household expenditures of $12,000 on a credit card. By using the chart below, you can see how this family would have fared over the last 9 years if they did exactly what our government has done. By continuing to spend well in excess of what it earned, this family has racked up over $200,000 in credit card bills.

Household Income Househould Spending Spending put on Credit Card Each Year Total Credit Card Debt
2003 60,000 72,711 -12,711
2004 63,000 77,219 -14,219 -26,930
2005 72,135 83,242 -11,107 -38,037
2006 80,647 89,402 -8,755 -46,793
2007 86,050 91,905 -5,855 -52,648
2008 84,587 100,453 -15,865 -68,513
2009 70,546 118,434 -47,888 -116,401
2010 72,451 116,420 -43,970 -160,370
2011 77,160 121,310 -44,150 -204,520

This week you will hear politicians and pundits say that we cannot cut our way to prosperity. Do not listen to this nonsense. It is a smokescreen designed to mislead you. There isn’t a single proposal in Washington that proposes to spend less this year than last year. All the proposals deal merely with reducing the growth in spending.

You will hear that we cannot balance the budget off the backs of seniors and poor people. Do not listen to this nonsense. It is a smokescreen designed to mislead you. Government expenditures on means tested programs have skyrocketed in recent years. Some modest reductions in these areas is more than prudent.

You will hear defense hawks speak with alarm about how cuts to the Defense Department will significantly impair the military’s ability to defend us. Do not listen to them. They are deluded by self interest. Just remember this one fact: the United States spends more on defense each year than basically all the other countries in the world combined.

The fact is that our government has borrowed over $1 trillion from China since 2003. Don’t you think we ought to quit doing that?

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