Making the U.S. Debt Look Like a Household Budget

SPRINGFIELD, Mo. -- If you stacked the U.S. national debt in one dollar bills you could go to the moon and back more than twice.

Unlike a family, countries can print money and make loans to other nations, while at the same time borrowing from them.

The ideas can seem abstract.

"I think that we're in a lot of trouble, personally, you know if this were just a family, my family, your family, anybody's family, yeah, you'd be in big trouble," says Drury University accounting student Brad Ray. "We have to exercise fiscal responsibility, we have to so, I think the federal government should have to do the same thing."

He's reacting to some numbers we showed him. Ray had seen the numbers before and you may have too:

S&P Downgrade Simplified U.S. Tax revenue: $2,170,000,000,000?

Federal budget:?$3,820,000,000,000

?New debt: $ 1,650,000,000,000

?National debt: $14,271,000,000,000

?Recent budget cut: $ 38,500,000,000

Let's remove 8 zeros and pretend it's 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

You may have seen emails or Facebook posts with figures similar to this. This one is from a Tea Party group. It aims to make the government's debt and deficits look like a home budget.

KOLR10/KOZL News looked over the numbers with a couple economists, got data from the Treasury Department and St. Louis Federal Reserve, and came up with a similar chart, based on fiscal year 2012.

Here are the rounded figures:

?

Now, take off those zeros:

?

Now consider this: Congress is looking at the sequester -- the across the board budget cuts, which are considered dramatic. If they go through, it would only cut this household's spending by $1,000 dollars this year.

"I worked hard to earn [my money] and I want to know where it's going," Steve Walton is a groundskeeper at Evangel University. He talked to KOLR10/KOZL while getting his taxes done.

"[National numbers and a household budget are] 'similar' in that they're using the words debt and deficits and things like that, but that's kind of where the comparison basically ends," says David Mitchell, Ph. D.

Mitchell is the director of the Missouri Bureau of Economic Research at Missouri State University.

"When you look at the balance, when you look at the net holdings, it's actually not as bad as it seems, although it is a problem that needs to be addressed. It's not like 'oh my gosh the whole economy is going to collapse tomorrow.'"

Of the more than $16 trillion in debt, nearly $5 trillion is debt the U.S. government owes within itself -- through programs such as social security.

The more than $11 trillion that's left is held by the public, a lot of that is owned by taxpayers, corporations and others.

"Now, the other half is owned by China and Japan for the most part," says Mitchell. "So they've lent us money, but we've also lent them money too."

For every dollar in foreign claims, the U.S. has 85 cents in claims on other countries.

Still, it means future taxpayer dollars will go to repay other countries, rather than staying in U.S. communities.

Mitchell has concerns about ballooning entitlements. He believes that deserves more attention than cuts to discretionary spending, such as defense.

Interest rates for the U.S. right now are cheap, sometimes cheaper than free -- when you take into account inflation.

Some believe running a deficit and debt isn't a bad thing and that investment is needed to kickstart the economy.

Finally, one of the most important numbers in this, that we haven't mentioned, is gross domestic product (the size of the economy). You have an idea of the size?of the debt. Economists typically look at that figure compared to GDP.

Right now the debt is around 100 percent of GDP, the highest levels since the end of World War II.

Source: http://ozarksfirst.com/fulltext?nxd_id=767912

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