Government Borrowing and You

  • Each year in early October we get the results of the Federal government's budget for the prior 12 months (in this case fiscal year 2016). As regular readers know here at TDS we do not like debt. So each year I cringe when I see the figures. Here's the latest:

    "The federal deficit for fiscal 2016 jumped to $588 billion, $149 billion bigger than last year's, the Congressional Budget Office estimated Friday.
    As a share of economic output, the deficit rose to 3.2 percent, up from 2.5 percent in fiscal 2015. That would be the first such increase in the deficit as a share of the economy since 2009, when the U.S. was still reeling from the financial crisis.
    Greater spending drove the increase in the deficit, according to the budget office. Total expenditures rose $168 billion, or 5 percent, to $3.86 trillion. Revenues only grew $19 billion, less than 1 percent."
    source here

     

    Those numbers are pretty hard to understand for someone like me who typically doesn't have anything bigger than a $20 bill in his wallet. So let me try to put it into perspective.

     

    According to government statistics there are 118 million households in the country. source here If you divide the new debt by the number of households you get over $4,900 per household. In other words, our friends in Washington borrowed nearly $5k in your name in the last 12 months!

     

    That brings the total federal debt to $19,688,773,606,117 ($19.6 trillion). Or $166k per household.

     

    Now if it were my family and I owed $166k in auto loans, student loans, personal loans and credit cards I'd be looking for ways to cut expenses and/or increase income. One thing I wouldn't do is spend 5% more than I did the year before! Of course this is political season where politicians love to make promises about all the things that they're going to do for me.

     

    This may be a little close to an editorial for some. And it's not aimed at any single candidate. But it's my opinion that any politician at any level (President all the way to your county commissioners) who promises to give you something for nothing is lying to you. It may not cost you something today, but it will cost somebody today and there's a real good chance that you'll end up paying for it later.

     

    Tax money is not free. If it's not covered in somebody's taxes today it's added to the debt total. Then we all get to pay interest on the borrowed money. And eventually if the debt grows too large our money becomes worthless.

     

    What can you do? Well, you can vote for candidates that tell the truth about what government can provide. And you can get your own financial house in order in case things get too crazy. Start by taking some information in this newsletter and put it into practice in your life. I'm sure that you're smarter than our friends in Washington and can find a way to put your finances on sound financial footing.


    Keep on Stretching those Dollars!
    Gary


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