This article first appeared in the St. Louis Beacon, March 7, 2013: The email arrived unsolicited. A friend forwarded it to my inbox after he’d received it from a mutual acquaintance. Nobody seems to know who wrote the thing originally. Attribution is apparently not a high priority among internet theorists.
Like so many of the factoids circulating through cyberspace, the text was intended to be read in cursory fashion and then shared with others as revealed truth. This particular missive sought to compare the nation’s financial situation to a family budget. It concluded — wrongly — that pending federal cuts equated to a $38.50 reduction in spending for a household making $21,700 a year.
The involved calculations contained a significant math error (the $38.50 should have been $385) and the figures cited were either out of date or inaccurate. And as long as I’m waxing pedantic, allow me to point out that “sequester” is a verb; when used as a noun, the proper term is “sequestration.”
My complaints notwithstanding, the idea of reducing the gargantuan numbers of the budget debate to comprehensible dimensions appealed to me. I thus took the government’s figures for Fiscal Year 2012 and sought to translate them into personal terms.
Here’s what Uncle Sam’s books looked like at the end of last year with all numbers rounded:
Tax Revenue Collected (income): $2,600,000,000,000
Expenditures: $3,700,000,000,000
Money Borrowed (deficit): $1,100,000,000,000
Total Debt: $16,400,000,000,000
Borrowing from our anonymous email author, let’s remove eight zeros from each of the above figures to see what this state of affairs would mean for an individual household:
Annual Income: $ 26,000
Expenditures: $ 37,000
Money Charged to Credit Card: $ 11,000
Outstanding Balance on Credit Card: $164,000
That’s basically the way things stood on Oct. 1, 2012, when the new fiscal year began. Had the status quo endured, the family’s credit card debt would have increased by $11,000 a year, ad infinitum. Instead, two significant developments altered the situation.
On Jan. 1, a last-minute deal was struck to avoid the so-called “fiscal cliff.” This arrangement repealed the Bush tax cuts for the most affluent of taxpayers, who make up less than 1 percent of the population.
The Congressional Budget Office anticipates the tax increase will yield an additional $198 billion in revenue, though that windfall will be partially offset by $41 billion in new spending. Our hypothetical household thus gets a $1,980 pay raise but also increases its expenditures by $410, realizing a net gain of $1,570 per year.
The fiscal cliff deal marginally improved the household’s position:
Annual Income: $27,980
Expenditures: $37,410
Charges on Credit Card for Year (deficit): $9,430
Outstanding Balance on Card at Year’s End (total debt): $173,430
Then, the sequestration struck. Originally intended as a default suicide pact, its impact was intended to be so draconian that even intractable political adversaries would be forced to compromise to avoid it Alas, the clowns who run the circus in D.C. were unable to strike a deal and $85 billion in mandated spending cuts became law on March 1. That translates to an $850 reduction in spending for the family budget.
Given all of these revisions, the household’s books now look something like this:
Annual Income: $ 27,980
Expenditures: $ 36,560
Charges to Credit Card this Year (deficit): $ 8,580
Outstanding Balance on Card at Year’s End (total debt): $ 172,580
The sequestration thus amounts to about a 2.3 percent reduction in spending. Even with it, the household will borrow more than $8,500 this year to pay its bills and increase its total debt to $172,580. Houston, we got a problem.
When a real family has to downsize its spending, one would expect responsible adults to set priorities to minimize the pain. Groceries, for instance, would take precedence over cable TV.
Unfortunately, the sequestration is taking place in Washington where responsible adults are in short supply. All we know is that half the cuts must come from defense; the rest from other discretionary spending — entitlements exempted.
Republicans, who reasonably insist that spending must be reduced, are loathe to get down to specifics. Instead, they offered to cede authority to the president to impose the cuts as he sees fit. Mr. Obama has declined that honor, not wishing to become the public face of job furloughs and layoffs. With elected officials taking a pass, it will fall the government’s famously faceless bureaucrats to do the dirty work.
At the moment, the ship of state may be better described as an airliner heading for a crash landing on autopilot — because nobody has the political courage to try to fly the damned thing.