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CURL: Econ 101 for dummies
Here is the situation the United States is in right now: Tax revenue 2011: $2,170,000,000,000 (that’s trillion)
Annual budget: $3,820,000,000,000
New debt: $1,650,000,000,000
Total national debt: $14,271,000,000,000
Latest budget cuts: $38,500,000,000
To make sense of the numbers, just remove eight zeroes and pretend it’s a household budget:
New debt: $16,500
Outstanding debt: $142,710
Budget cuts: $385
So, there it is. Simple. If you make $21,700 a year and you spend $38,200 a year, you got a problem - a $16,500 problem. Sure, you could be bold, like Congress, and trim out $385 (for comparison, that’s like a guy who buys a pack of Dentyne Ice once a week at the gas station trimming back to a pack every other week). But that would only cut our new debt to $16,115 - not really a long-term solution. (It isn’t even a short-term solution: That’s like cutting your overspending by just over 2 percent. Forget it, just get that extra pack of gum.)
But here’s what’s worse: You’ve been doing it for nearly nine years. You’ve spent nearly twice your income for nearly 10 years, and you’ve dug one big ol’ hole.
Now, you’ve got a few solutions. You can trim back your lifestyle by about half. Two weeks at the beach, oceanside, for $7,500? That’s out. No more beach. Dinner out twice a month all year long, at a $100 a pop? Gone. There’s another $2,400. But you’re still $6,600 short. So cut the cable-TV bill, no more data plan for the cellphones, set the thermostat at 74 in the summer, 68 in the winter. And forget those $5 lattes. In fact, it’s bag lunch and a lot more mac-and-cheese for dinner. And no, you can’t buy even one of those “As Seen On TV” products. Not one.
Those cuts might just get you there. But wait, you’ve still got that giant pile of debt you’re hauling around, year after year. Sure, you’ll break even for this year, but what about that $142,710 debt? To clear off all your debt, in, say, 10 years, you’d have to pay off $14,271 a year (and that’s at 0 percent interest - you got that, right? Sure, with your credit rating, no problem.) But you’ve been living like a 38-thousandaire. No way you can suddenly live like a 74-hundredaire.
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About the Author
By Tom Fitton
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White House pets gone wild!
Let it snow