My friend Norman recently forwarded me an article that helped put our Federal government’s financial dilemma in an understandable way.  I adjusted the numbers to more accurately reflect today’s typical household income, but the relationship between income, expenditures, and debt is dead-on.

Let’s pretend that the Federal government is this American household.  These several figures show the current situation as regards receipts, expenditures, and debt.  (Take each of these numbers and multiple by 25 million and you get the federal figures).

         

86,800                                    Net Annual Household Income

       152,800                                    Annual expenses (budget)

          66,000                                    Yearly deficit (excess spending over income)

     1,170,840                                    Total debt

          16,520                                    Annual interest on debt

Note that interest on the debt adds significantly to annual expenses, and any increase in interest rates could make that situation much worse.  Also, Social Security and Medicare are nearing a state of insolvency.  If they collapse, their continuance would depend on adding even more money to the annual budget.

This imaginary household would undoubtedly declare bankruptcy.  As for our Federal Government, we are in deep, deep trouble.

No Democrat leader has expressed concerns about the situation.  Instead, their answer is to spend, spend, spend.  Our only salvation may be to throw the rascals out and hope that  Republicans will come up with solutions 

I’m not enough of an economist to know what those solutions might be.