DiscussMormonism.com

http://www.youtube.com/embed/Li0no7O9zmE

Thumbs up from me.

To compare the federal budget to a household budget is why so many people on the Right are so ignorant.

The Debt Everyone Is Freaking Out About Does Not Exist

From your article:

So the debt that’s got everyone worried is the part we haven’t yet incurred. And that debt, by definition, does not exist. It’s not a certainty, it’s merely a projection by the Congressional Budget Office. And trying to model how the federal budget, not to mention the entire American economy, will behave years or even decades in the future is a devilishly treacherous business.

So, you're saying that when Congress has to vote to raise the debt limit (i.e. borrow more money), they need the money for projected future expenses? It's not for current (or soon to be incurred) debt?

This sounds a little more accurate:

The debt limit, or ceiling, which is the amount that the nation is allowed to borrow, must be raised if the United States is to pay for all the things that Congress has already bought: the spending in the budget bills it has already passed, the Social Security checks promised to retirees, the payments due to private companies with federal contracts and the interest on bonds it has sold. Washington has long spent more money than it takes in, and planned to make up the difference with borrowing. Both parties agree that this cannot go on forever. But if the debt limit is not raised, it will not cut the nation’s deficit or allow the government to get out of its existing obligations. It will simply make it impossible to borrow the money that the government needs to pay for them.

http://www.nytimes.com/2011/07/28/us/po ... ebtus&_r=0

Which is exactly what the video illustrates. Going into absurd amounts of debt on the assumption that you can always borrow more. At some point, the people who are taking the burden of the debt (in the video, the bank; in real life, the tax payers) need to think about the debt that is being incurred, and whether we want to keep increasing the amount and placing the burden on future generations.

cinepro wrote:At some point, the people who are taking the burden of the debt (in the video, the bank; in real life, the tax payers) need to think about the debt that is being incurred, and whether we want to keep increasing the amount and placing the burden on future generations.

Somewhat true (it's not a legitimate comparison), but during a difficult and fragile recovery is NOT the time to be slashing government spending. Embracing austerity right now is crazy. Now is the time to boost the economy by injecting money, not try to starve it.

The absurdity of comparing our national debt to a family's debt becomes clear when we see that much of the current fiscal problem is the result of foolish stewards of the government intentionally decreasing its income. When you find someone who thinks it's a great idea to volunteer for a pay cut when in debt, let me know.

To compare the federal budget to a household budget is why so many people on the Right are so ignorant.

Yes, the Left thinks wealth grows on trees as Bloomberg demonstrated today.

krose wrote:The absurdity of comparing our national debt to a family's debt becomes clear when we see that much of the current fiscal problem is the result of foolish stewards of the government intentionally decreasing its income. When you find someone who thinks it's a great idea to volunteer for a pay cut when in debt, let me know.

Why does it matter whether the pay cut is voluntary or not? If someone without a job goes to the bank for a loan, does the bank care whether he quit, or was fired?

Another key difference is the way in which government acquires money (compulsorily taking it from the citizens) vs. how a private individual acquires it (providing profitable goods or services). I guess if the banker in the video told the borrower to increase his income by going out and robbing other people, it might be a little more accurate.

Obviously it's not a perfect analogy (what ever is?), but the principle is valid nonetheless.

Here are two videos that are much better at explaining how the national debt actually works, in a concise and interesting way, but without the nonsensical comparisons to family debt.

http://www.youtube.com/watch?v=_7Xtj04QiQg

http://www.youtube.com/watch?v=3ugDU2qNcyg

In the OP video, a guy is asking a skeptical banker for money, and is seen as ridiculous because he is far from credit worthy. That loan is obviously not going to happen, and it shouldn't. This is not just an imperfect analogy, it's a complete miss (not to mention being insultingly juvenile).

As silly as it is, the example might have worked if it had shown many lenders anxious to lend him money at a very low interest rate. But then they should show his wife refusing to agree to borrow any additional money to pay the bills, which she has already racked up, because she alone is allowed to decide how much the family spends, and on what (not to mention how much income they take in, which she has cut and is stubbornly refusing to raise back up). That's closer to reality.

Our government is "borrowing" money (selling treasury bonds to millions of willing investors) at an interest rate that's lower than the rate of inflation. So investors are essentially paying the US government to hold onto their money.

krose wrote:As silly as it is, the example might have worked if it had shown many lenders anxious to lend him money at a very low interest rate. But then they should show his wife refusing to agree to borrow any additional money to pay the bills, which she has already racked up, because she alone is allowed to decide how much the family spends, and on what (not to mention how much income they take in, which she has cut and is stubbornly refusing to raise back up). That's closer to reality.

That analogy is perfectly good. If the wife realized that they were in way too much debt (and continued to spend more than they were taking in), it would be perfectly logical to stop taking out more debt, and working to reduce their obligations and lowering the amount they spend each year. As we saw with the real estate bubble, just because someone is willing to lend money to someone at extremely low rates doesn't mean it's a good idea.

I guess the perfect analogy would have the husband and wife go into counterfeiting and increase their income by printing fake bills. That way they don't have to cut their expenses, they can pay back their creditors, and everyone's happy and no one loses.

I guess the perfect analogy would have the husband and wife go into counterfeiting and increase their income by printing fake bills. That way they don't have to cut their expenses, they can pay back their creditors, and everyone's happy and no one loses.

The government doesn't print fake bills, so how is it a valid analogy? The best way to pay off debt is to increase revenue, not cut spending. Especially in our current political climate where there stands absolutely zero chance of cutting the things that would really make a dent in the deficit. The Republicans are so useless as politicians, they threw revenues off the table while pretending to be serious about debt reduction. They're proud of their ignorance on this point.

"The revenue discussion is over. That's behind us." - John Boehner

What the fuq?

And now Ryan is proposing ridiculous budgets that he knows stands no chance of passing. Hell his own buddies won't even vote on it, even if they agree with it, because they also know it doesn't stand a chance. They're just playing games knowing they have no chance of ever getting anything done this way.

cinepro wrote:If the wife realized that they were in way too much debt (and continued to spend more than they were taking in), it would be perfectly logical to stop taking out more debt, and working to reduce their obligations and lowering the amount they spend each year.

Sure. As long as you think it's "logical" for someone to suddenly throw a fit about debt that's needed to pay bills that are already due, and which she herself ran up, while cutting back on income and refusing to increase it again.

I'm sure it would be perfectly logical for a wife (who is in charge of all finances) to tell her husband to get a pool installed, go to their employers and ask to be paid less, and then when the bills for the pool are coming due, refuse to sign on to the loan that she knows is now necessary to pay for it.

That makes complete sense.