Monday, June 13, 2011

If the government were a family, how would its budget look?

For their final exam, I assigned my Persuasive Writing students to hold a model Congress in which they'll solve our nation's budget woes. Because giant numbers are hard to keep track of, I decided to pretend to revalue the dollar such that the government's annual revenue was not a mind-boggling $2.2 trillion dollars, but rather $45,000, which happens to be the current median American income.

On this scale:

1) The federal government would be spending about $76,000/year. Oops.

2) Its debt would be $300,000.

There's something fitting about that: it's like the government is trying to buy a full professor's house on an adjunct's salary. I can relate: except that unlike the government, I live in a basement apartment.

Should we relegate the government to a basement? Should we help it find a better job? I don't know, but here are some more figures that might make the debate in D.C. over these various issues a little clearer:

3) Our government is about $2,600 family-scale dollars from a balanced budget...per month. Note to those spending $76,000/year: please let us know if you can cut $2,600/month in "waste" or by "improving efficiencies." I'm a vegetarian so I wouldn't know, but could any of you save $2,600 a month just by cutting pork?

4) Letting the Bush tax cuts expire would generate around a scale $500/month in income. This is more than twice what the average panhandler makes in a month or what a just-below-average lawyer charges for two hours. Not enough to solve the problem, but maybe worth considering.

5) Cutting the Department of Education's budget in half would save a scale $66/month: the same as not eating out twice--if you're kinda cheap and leave lousy tips. And assuming you eat out at twice a month.

6) The Iraq war would have cost about as much as getting two new cars: a Camero for him and a Mustang for her (that's a scale $61,000 or so, depending who's counting).

7) That said, liberals who focus entirely on military spending are in some serious denial. Even eliminating the entire Department of Defense (which would be insane) wouldn't solve the problem: it would only save our federal "family" $1,300/month. Deep military cuts (say, 20%) would save a scale $260/month, so you're going to have to find something other than the military to complain about.

8) Speaking of entire programs: Medicaid weighs in at a scale $600/month. That means if we refused poor and disabled people all medical treatment, we could be 23% of the way to a balanced budget!

9) Since Americans buy 10.2 billion cases of soda per year, a soda tax of 25 cents a can would generate a scale $105/month: almost enough to fund the entire Department of Education.

10) Eliminating the Social Security Wage Base (which is a rule that you don't have to pay any social security taxes on income over $106,800/yr) would raise a scale $200/month: as much as a 15% cut in military spending.

So: assuming most of my math is right, you know have a clearer idea of the situation the federal government is in. I'm sorry if it depresses you: depending on your perspective, you can blame FDR for making a big government, Ronald Reagan for his failed experiment in raising revenue by lowering taxes, or George W. Bush for turning a projected budget surplus into an epically blown opportunity.

And then, when you're done being depressed, you can pat yourself on the back for being more financially responsible for the government. Although, to be fair, you aren't helping record numbers of people afford college, bailing out screwed-up private financial institutions, dealing regularly with maniacal tyrants overseas, and making sure people with bad credit ratings don't have to bleed to death on the streets if they get hurt.

So while it is important to help the government fix some things financially, maybe we should cut those "worthless" politicians and bureaucrats a little slack.

Pictured above: the author of this post doesn't let the budget
get him down. Republicans and Democrats come and go:
forget about them all and dance!


  1. Interesting. It is missing a few important bits: 1) scale figure for how much of a voluntary pay cut the govt took versus Clinton-era tax rates, 2) scale figure for how much of a voluntary pay cut the govt took versus Eisenhower-era tax rates, and 3) mention of how much lower the borrowing costs are for the govt.

    On 3) at present, Treasury rates are hovering around 3%. So where we might pay an average non-rewards interest rate of 15% (or for some of us 9.9%) for our credit card borrowing, the govt is able to borrow at far less expensive rates -- the sort of rates where it is fairly easy to use the money in a way that gets more return than the cost of borrowing.

  2. I think asking the politicians (who are deciding what to spend) to live on that average salary and have only average benefits would make a nice dent. Even if it doesn't, it would make the rest of us feel better.

  3. Unfortunately, cutting politicians' pay would not make a noticeable dent. If my calculations are correct, eliminating the salaries of Congress members and the President entirely would save about a scale 15 cents. Cutting them to $45,000 would save about a scale 11 cents.

    I'm also not sure it would make us feel better, because the cynic in me figures that Congress members would probably just start embezzling more campaign funds if we gave them drastic pay cuts. Or, worse yet, they might try to set themselves up to make more money after their terms as cable news celebrities instead.

  4. The tax rate discussion could definitely be more developed here. Republicans are fond of saying are problem is not with revenue but with spending: I hope my figures demonstrate that the problem is big enough for both.

    The debt does come with a low interest rate, and it has traditionally played an important role in world trade as about the lowest-risk place for private investors to put money. That said, housing interest rates are nearly as low in the current economy--and that doesn't make me think that a $300,000 house is a good investment on my income.

    The U.S. Government doesn't need to eliminate the national debt entirely, be we do need to get the deficit under control and come up with a plan to reduce the debt back into a more reasonable relationship to our tax revenue.


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