The fiscal cliff vs. the household budget
In an upcoming opinion piece in the January/February issue of Glass Magazine, economist Jeff Dietrich discusses the recent fiscal cliff deal and its effects on the economy. A familiar face at GlassBuild America, the senior analyst at ITR Economics knows our industry. His forecasts seem to always be right on the money. So that said, I will leave it to him to explain the ins and outs of the fiscal cliff deal and what it means for our country. For now, however, I had to share an analogy he references that compares the U.S. government's fiscal issues in terms of the family budget.
Fiscal Cliff Simplified
- U.S. Tax revenue: $2,680,000,000,000
- Fed budget: $3,760,000,000,000
- New debt: $1,080,000,000,000
- National debt: $16,066,000,000,000
- Annual sequestration cuts: $ 109,000,000,000
Now, pretend it’s a household budget
- Annual family income: $26,800
- Money the family spent: $37,600
- New debt on the credit card: $10,800
- Outstanding credit card balance: $160,066
- Total budget cuts so far: $109.00
Possible solutions: 1) Ask family members to invest in your future. 2) Believe that a 2 percent raise next year will solve everything. 3) Apply for more credit cards.
I'm neither an economist nor a politician, so I'm not taking sides on the issue. But if you'd like to weigh in on how the fiscal cliff deal will effect your business in 2013, feel free to comment below.
Chase is editorial director of Glass Magazine, GlassMagazine.com and e-glass weekly. Write her at jchase@glass.org.
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Comments
What amazes me most is, if this "household budget" scenario were real, I believe you've covered most of the available options. Unfortunately, this would ultimately lead to deeper debt, bankruptcy, lawsuits and possibly the loss of your home!However, if this were a business for example, the very same business may sue you or take your home away through foreclosure, the government would take taxpayer money and bail them out! In essence, the government takes your hard earned money through taxation and uses it to bail out large corporations so they can avoid bankruptcy, then get back on their feet and cause you to decare bankruptcy and possibly lose everything you've worked so hard to get! Talk about irony!
January 15, 2013 - 1:30pm
Tony, It amazes me on how wrong your thinking is, No wonder we have 4 more years to endure with this current regime.
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May 29, 2013 - 10:41am
I will leave it to him to explain the ins and outs of the fiscal cliff deal and what it means for our country. For now, however, I had to share an analogy he references that compares the U.S. government's fiscal issues in terms of the family budget.
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June 13, 2013 - 12:47am
As I have mentioned to several people, if you take the lawmakers out to a cliff and told them to compromise or you will throw THEM off the cliff, the second, or at least third pair to the front of the line would understand, IT IS TIME TO COMPROMISE AND FIX THIS.
January 15, 2013 - 5:47pm
Matt ole boy, Comprimise has got us to this mess its called cut Welfare cut all kinds of spending entitlements that our nation of sponges have come to vote expect!
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April 14, 2013 - 3:59am
The budget of our national government is not comparable to a family budget. Making that simplistic and misleading comparison is a disservice to our nation. Until journalists and our elected representatives muster enough ambition to actually educate the public instead of opting to use serious issues as cheap and easy opportunities for sensationalism, unethical politicians can exploit the ignorance of the public to gain support for dogmatic policies. The solutions that uninformed citizens would support, based upon your "example", would do great damage to our economy, and to our national balance sheet.
We have to carefully borrow, grow, produce, and build, our way out of the mess we created from unfunded wars and irrational tax cuts. If we try to cut enough to solve the problem, what we will actually cut is our own throats.
January 15, 2013 - 6:31pm
Your couldn't be more wrong its you way of thinking that has Destroyed a once free nation.
January 17, 2013 - 9:38am
Thank you for an excellent analogy. The growth required to repair the mess were in is absolutely unsustainable. Dwindling resources, water, fuel, land and the devaluation of our currency can no longer fund the growth of years past. The more we subsidize industries that cannot make it on there own, and print money to stimulate borrowing for things we can't afford, the more nails we drive into our coffin. The southwest is already on the verge of having grown beyond the capability to provide water to it's population. Electricity is barely made available through the ability to transfer power from and to the different regions as peak demands change. Gaining a larger share of the marketplace is not true growth. We have seen many companies in our industry buying out their competition hoping to get a bigger slice of a shrinking pie. The business model of growth based on cheap fuel and materials is coming to an end as our corporations begin to cannibalize one another. The analysis of the coming trends are for a quite different business model in the next decade after the coming crash. On a brighter note: buildings will still have windows, and someone is still going have to fix them. I just hope the people will remember the government works for us, not the other way around. Maybe if the civil SERVANTS will fill out OUR 20 pages of forms, WE might fix the windows in OUR buildings. P.S. Gold in advance please.
January 15, 2013 - 10:07pm
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April 6, 2013 - 2:41am
mrs.chase,
Very good example, all this does is put a huge ammount of burden on our small business. the govt keeps spending way above there means, that is just incomprehensible. they raised payroll tax, s.s tax... so thats not only on business, but our employee's. and with the new health care laws even more stresful, what people dont really comprehend, is if our debt goes past a non return, what happens to our u.s dollar? very scary....
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This math confuses me. I think you're comparing federal finances to family finances. I'd be interested in talking more about the validity of drawing that comparison, but I'm more curious about your math right now. It appears that to make this analogy, you divided all the numbers by 10 million, except for the sequestration cuts, which you only divided by 1 million. It looks to me like you're off by a factor of 10: if I were to use your analogy, the single-family "total budget cuts so far" would be $1,090, not $109. I may be misunderstanding your algorithm though: Can you explain how you got $109?
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