Debunking That Stupid Federal/Household Budget Graphic

If you’ve been on Facebook/Twitter/The Internet lately, you’ve likely seen this graphic, which purports to make it easy to understand why the US is in fiscal trouble. Of course, that graphic doesn’t tell the whole story, and is, quite frankly, idiotic. But I’ll continue the metaphor since people love thinking this is so simple.

A dozen years ago, your accountant, Bill Clinton, had some good news for you: “You’ve got about $56,000 in debt. But if you keep bringing money in like this, you don’t have to put any more debt on those credit cards and can finally pay down the debt that your old accountant, Ronald Reagan, encouraged you to run up.”

But you have to get a new accountant every 4-8 years, so this new guy, George W. Bush, comes in and says “I think you should give some of that extra money back to your boss, The American People.” What? Why would you do that when you have $50k in debt? Your boss would want you to pay some of it back, right? Plus, your peers at work (called the EU and OECD) make a lot more than you do and don’t have to worry about this debt issue.

No, says George W. Bush! Pay it forward, Kevin Spacey styles – give some of that money back now, and you’ll get SOOO much more later that it’ll be easy to pay off those credit cards. And there won’t be any rainy days, like wars or recessions, so you really don’t need the extra cash. And anyway, your friends at Bank of China will be happy to lend you more if you need it, which you won’t. And Accountant Bush is really convincing, so you go for it.

But you know, shit happens, and for the next eight years your credit card debt skyrockets from $56,000 to $100,000. All the while, you keep telling your boss you really don’t need that raise, because Accountant Bush is telling you things are just fine and Bank of China keeps raising your credit limit.

This new accountant, Barack Obama, gets here in 2009, and says “Holy shit – what have you been doing for the past decade? You’ve been giving up your raises, have no money saved, and owe everyone way too much money!” But it’s not so simple anymore – your boss can’t give you a raise, and in fact he’s docking your pay so he doesn’t have to lay you off, because the economy has gone to shit.

But the news gets worse. Accountant Obama tells you that Accountant Bush was hiding a lot of expenses to make your finances look better than they actually were. You’ve been putting off a lot of expenses, like major home repairs, medical procedures, and pest control. And between that and your boss cutting your pay, you’re going to have to keep using credit cards for a bit just to get caught up. And that makes the picture much, much worse – now you’ve got a whopping $142,000 in credit card debt and your boss (The American People) is starting to notice that you’ve got a problem.

So Accountant Obama and your boss agree that if you’re going to get out of trouble, you need a raise. But they’re not allowed to decide that by themselves – they have to take a vote. And the committee (Congress) that votes on your salary does not like raises, even though it ALWAYS agrees to raise your credit limit. They believe in that whole Bush/Spacey pay-it-forward line of thinking. It never quite worked for you and got you in a shitload of credit card debt, but they’re still saying “be patient, this will eventually work, and in the meantime we’ll let you run up your credit cards even more to pay your bills!”

Accountant Obama tells you straight up that the committee has no idea what they’re talking about, and you agree, but without them you can’t do a damn thing. You’re living paycheck-to-paycheck, using your credit cards to get by. The committee’s best advice is to not buy that weekly latte and keep running up those credit cards. This committee is starting to sound a little irresponsible, isn’t it?

The good news is that in November, you get to pick a new accountant (President) and a new committee (Congress). Take a hard look at who’s being responsible, who’s doing the best job for you, and who can’t get off their lazy asses to fix these financial problems.