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Friday, September 02, 2011

US Budget Deficit - In simple terms!


This explanation on the US Budget Deficit originally came from a Texas source.

The U.S. Congress sets a federal budget every year in the trillions of dollars. Few people know how much money that is so we created a breakdown of federal spending in simple terms. Let's put the 2011 federal budget into perspective:


*U.S. income (Tax Receipts and Other Revenues)
$2,170,000,000,000

*Federal budget (Projected Spending)
$3,820,000,000,000

*New debt (Difference between Income and Spending...This Year!!)
$1,650,000,000,000

*National debt (Amount Owed to People/Countries who Lend to us)
$14,271,000,000,000

*Recent budget cut (Spending that the politicians agreed to cut)
$38,500,000,000




It helps to think about these numbers in terms that we can relate to. Let's remove eight zeros from these numbers and pretend this is the household budget for the fictitious 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 (or spending reduction): $385


So in effect last month Congress, or in this example the Jones family, who owe $142,710 on their credit card, sat down at the kitchen table and agreed to cut $385 from its annual budget. What family would cut $385 of spending in hopes of paying off the $142,000 balance while adding $16,500 in additional debt each year?

You would think the Jones family (or our Congress) would recognize and address this situation, but in this example, the Jones Family does not.... and neither does our Congress. Unfortunately, while the Jones Family's situation is fictitious, our country's is real and when you add eight zeros, it’s really scary.

One part of the debt problem is that the voters typically do not send people to Congress to save money. They are sent there to bring home the bacon to their own home state. To effect budget change, we need to change the job description and give Congress new marching orders.

It is awfully hard (but not impossible) to reverse course and tell the government to stop borrowing money from our children and spending it now. If we don't take serious action soon, our kids and Grandkids won't know the America that we grew up in.

*Thanks, Bright Eyes

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