No, The Federal Budget is Not Like Your Household Budget

A seductive form of idiocy has been circulating on Facebook, purporting to clarify the federal budget by removing some zeros and couching it in terms of a family budget.  Ahhh, now it comes clear – we have a deficit, and if my household had such a deficit, I would be in trouble.

No. Simply no. Don’t fall for this.

Don’t post this and encourage your friends to join you in your “common sense” understanding.

There are three main problems with this misleading piece of work. First, and most fundamentally, it is based on a basic false premise – the federal government does not work like a household budget. Most families do not print their own money, or have the vast majority of their debt held by members of the same family. Second, its fundamental dishonesty leads to a disastrous conclusion. Third, if you insist on analogizing the federal budget to household budget, then at least get a better grip on where the cuts would come from.

To put the silly analogy on the defense, how does it apply if a newly emancipated 18 year-old is considering taking out a student loan to launch a career? How does it apply if a family member has a heart attack, and the family doesn’t have the cash on hand to pay for a doctor that day? Why does this family insist on spending such a huge percentage of its budget on guns? This family would be just fine if it got along with its neighbors better . . .

12 Responses to “No, The Federal Budget is Not Like Your Household Budget”

  1. Carla says:

    I guess it is fair to say that Romney’s household budget is much closer to the Federal Budget than mine.

  2. les says:

    Nice. One of the top seductive idiocies out there. I also like the “we’re just like Greece!!!” version, where the similarities are just like the household budget–nonexistent. The one seductive idiocy that may bear thought is comparing gov’t. to running a business, at least if you look at the Mittster’s tenure at Bain–rack up unsupportable debt, sell off/privatize the good bits and walk away. The republican dream; well, substitute “play third world dictator with the remainder” for “walk away.”

  3. craig says:

    Where do I start Dan? While it is true that comparing the Federal budget to a family budget is oversimplification, there is no economic theory that says consistently spending 45% more than you take in is a good long term strategy. And while it is true that the Feds can just print their own money, it sure doesn’t mean that they should. And the twit that you linked to in order to rebutt this? He compares 9/11 to a broken window from a thrown rock. You try to rebutt something that is slightly mislesding with a completely idiotic, clueless rant.

  4. gonemild says:

    Craig – I don’t hear anybody advocating that we should consistently spend 45% more than we take in as a good long term strategy. Do you?

    On the other hand, I don’t know of anyone who disputes that the Fed should be able to print money. Somebody has to provide currency, you know?

  5. craig says:

    Dan, every politician in D.C. is advocating long term, consistent, unsustainable deficit spending. Not by their words, but by their actions.
    And what I meant is that the Fed shouldn’t use the power of printing money as a tool to control the economy.

    Shouln’t you be in bed? :)

  6. les says:

    every politician in D.C. is advocating long term, consistent, unsustainable deficit spending.

    Citation needed. I get that we’re seeing the results of a massive failure of the US education system; argument by assertion, straw man argument (as so ably demonstrated in your initial post), by assuming false premises, the notion that facts are less important than beliefs; voting against self interest based on unexamined catch phrases.
    But are you also memory impaired? A decade ago–not so long, really, for a functional human memory to work–we had a balanced federal budget. Many, if not most, of the “every politician in D.C.” you claim to speak for were in govt. then, voting for the policies that created that surplus.
    “…printing money as a tool to control the economy.” Are you living in the same world as the rest of us? Next you’ll tell us “Oh Woe, we’re just like Greece!!” You’re right–the Fed shouldn’t do that–fucking duh. But, there’s no shred of evidence that the Fed, is, will, or even can do that.

  7. Jeffrey says:

    I have two doctorates, one in the mathematics of finance. I work in finance. You are completely mistaken. The “household budget” approximation is an excellent one.

  8. gonemild says:

    Alleged doctorates aren’t very convincing, especially in the absence of logical argument. I win, “Doc”.

  9. Doctor Doolittle says:

    Those must be some low-rent doctorates your new friend got, Dan.

  10. Jack says:

    There is another significant difference. Our Children and Grandchildren have to pay the Federal debt, while the Constitution forbids having children pay the debts of their parents.

  11. gonemild says:

    Jack – the kids are getting a pretty decent bargain. They get to drive on highways they don’t have to buy and live in an economy they didn’t build.

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