Wednesday, 14 September 2011

Government budget as a family budget

thevoiceofreason2 posted an interesting comment on Daniel Hannan's latest post:
Somebody needs to do this for the Greek economy

US financial position is as follows:-

US tax revenues$ 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

Now just remove 8 zeroes and pretend it is 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
Okay, so the US isn't yet paying credit card interest rates on its debt, and it has options that ordinary households don't (like stealing and money printing), but it's shocking nonetheless.

I haven't checked whether the figures are accurate, but they look about right, and it's a great way of presenting the problem. I'll try to find time to knock up a similar example for the UK.

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