March is the month when John and Isabella do the family budget, so they cleared the dining room table, spread out the documents, got a pad and a pencil and went to work. This year they expect an income of about $103,500 but they will have living expenses of $172,500. Oops!
They had to find a way to close that gap so they proposed balancing the family budget by borrowing $69,000; they went to see their banker about a loan. The banker had a problem with the plan. He reminded John and Isabella that they still owed the bank about $1.7 million from borrowing in previous years and that equaled more than 15 years of their current income. How and when would they start paying it off?
They haggled and haggled and the banker finally said he wanted them to reduce their budget by 5 percent – $8,500 – as a gesture of good intentions and then he would lend them $60,500 this year and just add it to the $1.7 million they already owed.
John and Isabella thought about it a long time and they finally agreed. As the banker was writing the check John said, “You know, this is really going to ruin my carefully drawn budget, we’re going to have to scale down our vacation plans and I’m going to tell the kids that you spoiled their summer.”
Obviously, this little parody refers to the bit of Kabuki theatre taking place in the nation, but it is based on real numbers. If you multiply John and Isabella’s budget by 10 million – adding seven zeros – you have the actual federal budget and sequester.
The numbers are so large they are almost impossible to fathom; federal spending is $4.7 billion every day. You may think it’s worth it, but we are not paying for it and we are borrowing $1.9 billion a day to fund it. Every man, woman, and child in the nation is carrying $54,000 in debt and much of it will be paid back with a lower standard of living. By the way, those who have assets will end up paying much of the debt for those who don’t and those who don’t will just sink further as their dollars buy less.
The total national debt is almost $17 trillion. This year’s budget is $1.725 trillion, but the government’s income is only $1.035 trillion. To make up the difference we were scheduled to borrow another $690 billion – or 40 percent of the entire budget. The sequester cuts a mere $85 billion, or 5 percent from the total – if it stays in effect for the entire year we are still going to borrow $605 billion.
If the federal government can’t find a way to save 5 percent of a budget that is balanced with 40 percent borrowed money how will they prevent interest on the debt from eventually gobbling up the entire budget?
Those who say it’s not the cuts, but the way they are doing it, need to be reminded that this was a White House proposal. The plan for sane cuts put forward by the bipartisan National Commission on Fiscal Responsibility failed when three of the eight Republicans and four of the ten Democrats voted against it, including some of the president’s strongest supporters. Those are only the on-budget figures, if you include the off-budget figures and get rid of creative accounting we are actually scheduled to borrow 47 percent of the federal budget this year, but what’s another $120 billion in debt between friends?
Marty Richman is a Hollister resident.
