“Bill” Board Days 4-6: If you can’t pay for it, put it on your credit card

As of Fiscal 2011, the last full fiscal year for which data is available and published on the White House website, America borrowed 40 cents on every dollar it spent. The deficit (viz., the amount of money the government spends less the amount of money it took in as tax receipts) in 2011 was the second largest in history: $1.298T.  Expenditures in 2011 represented 24.1% of Gross Domestic Product (viz., GDP, the value of all goods and services produced by the United States –  the highest expenditure rate in the post-World War II era.

More problematic is the fact this is not just a single event: it is a trend.  The Obama administration owns the record for the largest deficits in the history of the United States: $1.416T (2009, the largest); $1.298T (2011, 2^nd largest); $1.294T (2010, 3^rd largest). While warning of the dangers of deficit spending and promising to cut our deficit in half during his first term (the deficit was $458B in 2008), the President has in fact almost tripled that number.

Since 2008, the Obama administration added almost $5T in debt (viz., accumulated deficits).  This increase, over a period of 3 years, is approximately equal to 50% of the US Debt that was held by the treasury when the President entered office.  Think about that:  it took the country from 1789 to 2008 to accumulate $10T in debt.  It took the President 3 years to increase it to $15T.

To make the point, refer to the following graphic, which illustrates the administration’s profligate spending in terms the average American can understand: a household budget.

If the government were a household, it would be earning $23,000 per year but spending $36,000 per year.  The $13,000 shortfall (deficit) would be put on the household credit card, which already carries a balance of $150,000.  Current annual credit card interest payments are $2,500 and will grow as the balance grows and interest rates go up. 

Any person who runs a household knows this financial situation is unsustainable. So why does the President continue to “invest” (e.g., spend) even when he has stated that “we will not and cannot sustain deficits like this without end?” I do not know. Perhaps this is answer we should demand from him after he is defeated at the ballot box on November 6^th.

Vote November 6^th.