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Federal Budget 101

Posted Jul 21 2011 11:42am

This is a reprint of a letter to the editor published in The Advocate in Baton Rouge, Louisiana, regarding the budget dilemma. How is this related to real health reform . . . the answer is obvious, we lack the funds to achieve any grandiose federal program . . . and lack the will, so it seems, to address health reform in the proper manner which is dealing with consumers and insurers directly . . . obi jo

Federal Budget 101 (by David Thomas)

The U.S. Congress sets a federal budget every year in the trillions of dollars. Few people know how much money that is so we created a breakdown of federal spending in simple terms. Let’s put the 2011 federal budget into perspective:

U.S. income: $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 (about 1 percent of the budget)

It helps to think about these numbers in terms that we can relate to. Let’s remove eight zeros from these numbers and pretend this is the household budget for the fictitious Jones family.

Total annual income for the Jones family: $21,700
Amount of money the Jones family spent: $38,200
Amount of new debt added to the credit card: $16,500
Outstanding balance on the credit card: $142,710
Amount cut from the budget: $385

So in effect last month Congress, or in this example the Jones family, sat down at the kitchen table and agreed to cut $385 from its annual budget. What family would cut $385 of spending in order to solve $16,500 in deficit spending?

It is a start, although hardly a solution.

Now after years of this, the Jones family has $142,710 of debt on its credit card (which is the equivalent of the national debt).

You would think the Jones family would recognize and address this situation, but it does not. Neither does Congress.

The root of the debt problem is that the voters typically do not send people to Congress to save money. They are sent there to bring home the bacon to their own home state.

To effect budget change, we need to change the job description and give Congress new marching orders.

It is awfully hard (but not impossible) to reverse course and tell the government to stop borrowing money from our children and spending it now.

In effect, what we have is a reverse mortgage on the country. The problem is that the voters have become addicted to the money. Moreover, the American voters are still in the denial stage, and do not want to face the possibility of going into rehab.

By: DAVID THOMAS
Chief Executive Officer
Equitas Capital Advisors LLC

David S. Thomas, Jr., CIMA®
Senior Investment Management Consultant
Chief Executive Officer
Equitas Capital Advisors, LLC
365 Canal Street, Suite 3050
New Orleans, LA 70130
www.equitas-capital.com

Share this with others if  you feel it makes the situation we face more understandable.  I think for many it would . . . obi jo

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