Fiscal Cliff, in Plain English

[Darrell KSR]

“Fiscal Cliff” put in a much better perspective.

Lesson # 1:

* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38.50

Got It ?????

OK now,

Lesson # 2:

Here's another way to look at the Debt Ceiling:

Let's say, You come home from work and find

there has been a sewer backup in your neighborhood....

and your home has sewage all the way up to your ceilings.

What do you think you should do ......

Raise the ceilings, or remove the crap?

[CattyWampus]

Well done, Darrell, well done.

[CitizenBBN]

Sums it up very well. If this were a household or a business or even a smaller country it would have all come crashing down. The hard work of generations of Americans created the credit and economic goodwill that has allowed this last one to borrow into oblivion. It will come to an end.

[dan_bgblue]

Here's another way to look at the Debt Ceiling:

Let's say, You come home from work and find

there has been a sewer backup in your neighborhood....

and your home has sewage all the way up to your ceilings.

What do you think you should do ......

Raise the ceilings, or remove the crap?

Find a new home

[BigBluePappy]

:sHa_clap2:Cliff, Jr. approves this message.
:
“Fiscal Cliff” put in a much better perspective.

Lesson # 1:

* U.S. Tax revenue: $2,170,000,000,000
* Fed budget: $3,820,000,000,000
* New debt: $ 1,650,000,000,000
* National debt: $14,271,000,000,000
* Recent budget cuts: $ 38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

* Annual family income: $21,700
* Money the family spent: $38,200
* New debt on the credit card: $16,500
* Outstanding balance on the credit card: $142,710
* Total budget cuts so far: $38.50

Got It ?????

OK now,

Lesson # 2:

Here's another way to look at the Debt Ceiling:

Let's say, You come home from work and find

there has been a sewer backup in your neighborhood....

and your home has sewage all the way up to your ceilings.

What do you think you should do ......

Raise the ceilings, or remove the crap?

[Doc]

Sums it up very well. If this were a household or a business or even a smaller country it would have all come crashing down. The hard work of generations of Americans created the credit and economic goodwill that has allowed this last one to borrow into oblivion. It will come to an end.


But .... but ....... but .......... that's different. This is govt and thus logic does not apply!

[CitizenBBN]

But .... but ....... but .......... that's different. This is govt and thus logic does not apply!

Yep, a government run and advised by a lot of people who think they're so smart basic arithmetic doesn't apply to them. They know more than any past leaders and the empirical cases of the disasters that come from these policies don't apply b/c things are different somehow and only they are smart enough to see it.

[bigsky]

The other thing they'll tell you is that "debt doesnt matter as long as you have income to cover it". And, "Grandpa worried about the debt in his day, and that was for nothing".

Yes debt and leverage it provides can be good if it is making money. But it's risky to incur the level of borrowing and pension debt we have. Many companies have declared bankruptcy because debt affected their competitive position in the marketplace.

[Doc]

The other thing they'll tell you is that "debt doesnt matter as long as you have income to cover it". And, "Grandpa worried about the debt in his day, and that was for nothing".

Yes debt and leverage it provides can be good if it is making money. But it's risky to incur the level of borrowing and pension debt we have. Many companies have declared bankruptcy because debt affected their competitive position in the marketplace.

Except the debt we have as a nation isn't to create anything. If you barrow money to produce something and get a positive return on investment, enough to cover debt service and produce a profit, then there is nothing wrong with debt. However the government produces nothing to get any return on investment. All they can do to cover the debt is take more from the citizens than it spends, and when you are taking from 1/2 of the population and giving to the other half, then there is no hope of ever servicing the debt.

[bigsky]

For those who get the "grandpa worried about the debt and nothing has happened yet" the best answer is cities', and soon states' bankruptcies due to debt and pension obligation overload

[CGWildcat]

Can I use this Darrell?

[Darrell KSR]

Can I use this Darrell?

Of course. It is not my original creation anyway, but you could regardless.

Sent using Forum Runner. All typos excused.

[Stoop Dogg]

Fine job Darrell. :unworthy:

[Doc]

The hypocrisy of the "fiscal cliff" is amusing IMO. Folks have their panties in a wad because its going to results in the expiration of the "bush tax cuts" and cause taxes to rise on everybody. "OH NO, THAT CAN'T HAPPEN" yet the mantra has been raise taxes "on the rich". As the old saying goes, "don't raise taxes on you or me, raise them on the man behind the tree". Those who have met me know I'm not "rich" but if this was next year, I'm be affected by the "tax the rich" crap because I sold a business and used that to pay off debt. Yet Obama has his way, I get nailed with 30% cap gains tax or 37% income.

but as the OP shows, the problem is spending. You could tax every person in the nation more, using Darrells numbers for the new debt per year and dividing by number of households in the country, we need
$14,750 per household (that is every single household) in ADDITIONAL taxes to meet the yearly debt. It creates a "balanced budget" for the year and does nothing for the 16 trillion dollar debt.

The take home message is that you can not tax the nation out of this mess. What is being done and will continue to be done is that the can will be kicked down the road because to address it you need to cut payouts and when you cut payout to the citizens you lose their votes. Both sides will kick it down the road in order to maintain the political careers. then when the **** does hit the fan, each side will blame the other.