Dave Ramsey's Simple Analogy Makes It All Clear

Financial advisor Dave Ramsey, who understands the ball-and-chain of debt like no one else, puts the national debt into simple terms that anyone can understand:

“If the US Government ​was a family, they would be making $58,000 a year, they spend $75,000 a year and are $327,000 in credit card debt. They are currently proposing big spending cuts to reduce their spending to $72,000 a year.”

Got the picture now? Washington sure as hell doesn't. The Democrats are calling for higher taxes, which (to use Dave Ramsey's numbers) would raise the family's income (perhaps -- remember the Laffer Curve) by only about $5,300 per year. And under the Democrats' spending rules, any such increase in revenues would promptly allow them to increase spending by the same amount. So instead of taking in $58,000 and spending $75,000 per year, they would be taking in $63,300 and spending $80,300 per year. What a great way to reduce debt!

But even under the Republicans' Ryan plan, spending would still be reduced just to about $62,400 per year in Ramsey's numbers. So without an economic recovery, which would bring in more income for everyone, resulting in more taxes (without raising them), the Government (family) will still be increasing its credit card debt for the foreseeable future. And that is a recipe for bankruptcy, no matter how you slice it.

(H/T: Pat Dague's Transfigurations)

[UPDATE 08/09/2011: I know that it will not be popular among some of my friends to point this out, but facts are facts, and a Curmudgeon's duty is to call everyone's attention to unpleasant facts: the truth is that President Barack Obama has no clue about our current situation -- how we landed in a debt crisis, or what to do to get out of it. Sarah Palin, in stark contrast, gets it -- she really does. She understands basic economics, knows what has to be done, and lays it all out in simple terms, for everyone to see. (Moreover, as she explains, this is not some new enlightenment that has recently dawned on her -- she has been saying the same things for quite some time now.)

Remember how certain all those on the left were that Barack Obama would make a brilliant President, and Sarah Palin an incompetent one? The sad thing is that, even now, those who drew the comparison still cannot see the difference, or how wrong they were.]