Several of you wrote about my fuzzy math yesterday. Unfortunately my math is essentially correct. What we need to remember is that the debt deal is over ten years and the first tranche (or reduction stage) of $400 billion must be divided by 10 which amounts to approximately $40 billion per year. Our country spends approximately five billion a day and in 8 days this hard fought over amount of money is gone. One analyst compared it to being as insignificant as “spit in the ocean” when compared to what we owe. My feelings are that it is a step in the right direction, but much more needs to be accomplished and SOON!
Not to belabor the point because it is depressing, but the idea that they name this a “debt” deal is a misnomer and a joke. Some who have written to me obviously think we are paying down the $14.5 trillion our country owes by $2.4 trillion.
I wish…
It is not a debt deal; it’s a spending deal. Our country borrows about 42 cents of every dollar that we spend. This bill is an attempt to cut some of that spending in an effort to move towards a balanced budget. Just like your household, or mine, or any business, or country we cannot indefinitely continue to spend more than we make without bad things happening. Our country borrows money every day so it can spend money it does not have.
Confused? Okay suppose you are personally $100,000 dollars in debt and you make $100,000 per year. Currently you are spending $150,000 (or $50,000 more than you make) which means you will have to borrow money to pay for your spending habits. Every dollar you borrow gets added to the $100,000 that you already owe. The debt is also earning interest which is compounding as it accrues because nothing is being paid to reduce it.
For simplicity sake I’ll use a ten per cent interest rate.
- If you are paying interest on your $100,000 debt at ten per cent, it will earn $10,000 in year one, so now you owe $110,000.
- In year two you will owe $11,000, (ten per cent of $110,00), more in interest payments, so now you owe $121,000
- In year three you will owe $12,100 more, so now you owe $133,100 and so forth…
Now that seems bad – right? Well don’t forget that we are spending approximately 42% more each year than we make. So in addition to the interest that is accruing and compounding we are adding $42,000 to our debt that will increase all of the foregoing exponentially.
Now imagine paying interest on $14.5 TRILLION dollars and it is not only compounding, but getting worse because we are continuing to borrow more and more. If we don’t quit spending more money than we make and if we don’t stop borrowing our country will eventually collapse. That is what is happening to Greece and other socialist countries right now.
Some people seem oblivious to this scenario. It is not a Republican issue, or tea party, or Democratic issue; it is reality. Everyone wants to help the poor and the sick, and the whatever, but there is not enough money to do it the way we are doing it. Somehow our nation needs to get to a balanced budget and then we need to earn a surplus and pay off our debt.
We all need to do that in our own households too. Sure it would be nice to have a brand new car and as hot as it is a nice cool refreshing swimming pool would be …well cool. But if we cannot afford it then we better make do with what we have or plan on seeing a bankruptcy attorney soon.
Call me one of those tea party terrorists if you must, but this is simple economics folks. I didn’t go to Harvard like our illustrious leader, but even a low life street bum like me can figure this one out. We cannot spend money we don’t have, no matter how noble the cause.
Hmmm….I forgot I’m not trying to get re-elected so this might not make sense to any politician who might happen to read this. If you take away someone’s check, then they might not vote for you – right?
I get it.
I was in Sunday school last week and we were discussing this situation and one of the guys who happened to be the local high school head football coach said, “Fortunately we know how all of this is going to come out and it’s good”. He compared it to a football game and how if he already knew that his team would win the game, he wouldn’t have so much angst and consternation during the game. Our Sunday school teacher who used to be the head football coach dryly remarked that if he knew ahead of time that he was going to win, he would refrain from grabbing nearly as many face masks and screaming at his players during the game too.
Hmmm… I think this should apply to us too, but ain’t it hard….
The evangelist Billy Graham said the same thing. He has read the last page of the Bible and things turn out good. Not to worry. God loves us and things will work out for the good for those of us who love Him. We all need to keep that in mind as we fight our way through this mess.
Romans 8:28
And we know that in all things God works for the good of those who love him, who have been called according to his purpose.