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January 1, 2012
A Simple Way to Think About the U.S. Debt and Deficit Problems
A SnyderTalk reader sent me an email which contained the information below. It's a simple way to think about the U.S. debt and deficit problems. The numbers are several months old so the problems we face are actually worse than the numbers suggest, but they're close enough to get the message across to thinking people:
U.S. Tax revenue: $2,170,000,000,000
Fed 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
Let's remove 8 zeros and pretend the numbers reflect a household budget:
Annual family income: $21,700
Money the family spent: $38,200
New debt on the credit card: $16,500
Outstanding balance on the credit card: $142,710
Total budget cuts: $385
Our debt and deficit problems aren't too complicated to understand. In fact, they're easy to grasp. I get it; you get it; and so do our elected officials. There are two significant differences between us and them. One, we must make ends meet or we'll go bankrupt. Two, we can't print money because it's illegal.
The United States can go bankrupt, too. The Standard & Poor's downgrade of U.S. bonds suggests that we are moving in that direction. If we don't control our spending and do it soon, we will go the way of Greece and Italy. If our creditors have to force us to do what we should do on our own, we may have rioting in the streets just like Greece and Italy did, and they will force us to deal with our debt and deficit problems unless we take corrective action before it's too late. I think that it may be too late already, but time will tell.
Unexpected things happen when people take to the streets. For example, just look at what's taking place right now in Tunisia, Libya, Egypt, and Syria. If you think that it can't happen here, you are mistaken. The only thing needed to turn a movement such as Occupy Wall Street into violent protests all across the nation is a champion with an agenda. Are those types of people lurking in the shadows? It's naïve and foolish to believe that they are not.
The 2012 election may be our last opportunity to turn our nation around before we face dire consequences. If you care about our nation's future, you need to do everything you can to make sure that we elect people who will to act responsibly. That means we need to elect people who are willing to put our nation's interests ahead of their personal political and financial goals. Is that asking too much? I hope not, but as I said before, time will tell.
Neil Snyder is a chaired professor emeritus at the University of Virginia. His blog, SnyderTalk.com, is posted daily. His latest book is titled If You Voted for Obama in 2008 to Prove You're Not a Racist, You Need to Vote for Someone Else in 2012 to Prove You're Not an Idiot.
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