The Budget So You and I Can Understand It.

This piece I has been around the Internet for a couple days and yesterday Rush Limbaugh read it on his show.   If this does not make it clear for every  Tom and Jane in the country, nothing will.  The budget deal was a farce and will not solve our problems. S&P was right in making it an issue and I hope that our legislators will wake up and smell the emergency!

Here is the piece:

Let's put the 2011 federal budget into perspective and I don't know if these are the exact figures.

·       US income: $2.17 trillion.
·       Federal budget: $2.82 trillion.
·       New debt, $1.65 trillion.
·       National debt, $14.271 trillion but it's now closer to $17 trillion with the debt deal.
·       Recent budget cut: $38 billion, which is about 1% of the budget.
·       The budget cut was 1% of the budget: $38.5 billion in the debt deal.  That's what everybody was celebrating and high-fiving over. What this piece does is to help think about these numbers in terms that we can relate to.

Therefore let's remove eight zeros from these numbers and let's pretend that this is the household budget for the fictitious Jones family.

·       Total annual income for the Jones family is $21,700.
·       The amount of money the Jones family spent was $38,200.
·       The amount of new debt added to their high interest credit card, $16,500.
·       The outstanding balance on their credit card with an annual income of $21,000 is $142,000.

That's how much they owe and because the Jones’s realize they're in real trouble, they decided to become responsible and cut their spending.  After a lot of posturing and wrangling, they agreed to cut $385 from their budget.

A family with a $21,700 income spends $38,000, adds $16,000 of debt on their credit card to a balance already at $142,000 and decided to "get serious" so they cut spending $385.

That's what we just did except we did it with trillions of dollars instead of hundreds and thousands.