Popular personal finance personality Dave Ramsey summed it up eloquently and simply: “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.”
“The current deal to raise the debt ceiling doesn’t stop us from going over the fiscal cliff,†Senator Rand Paul, Republican of Kentucky, wrote Monday in an open letter explaining his opposition. “At best, it slows us from going over it at 80 m.p.h. to going over it at 60 m.p.h..â€
http://www.nytimes.com/2011/08/03/us/politics/03spend.html
I took and would definitely recommend Dave Ramsey’s financial peace university. The courses are offered all the time and you can find a local church giving one at Dave Ramsey’s site [url=http://www.daveramsey.com/fpu/locate-class/ ]here[/url]. Even if you think you have your financial house in order, your neighbor, sibling, child, etc., doesn’t and could use the sound advice you will learn to offer after taking this course. And getting out of debt is only the first part of the course.
I am more and more convinced that our country’s economic problems is our fixation on GDP, basically personal spending (about 70%) and government spending (about 30%). So families spending 105% and government spending 140% of their income is a good thing. We constantly hear that “sitting on a wad of cash” is a bad thing. We need to dump the GDP metric to one that makes saving, employment and budget surpluses not deficits are a good thing. In the throes of the great depression, GDP [url=http://www.urbandigs.com/2008/10/a_new_age_depression.html ]growth rose to never seen before or after heights[/url]. I would hardly want to be in 1935.
What I value most about this blog are posts that are highly informed and objective which, apart from T19, I would never find. The Annenberg Institute (?) post from a few weeks back is the perfect example. If we’re going to feature Rand Paul, Dave Ramsey, and the WSJ, let’s round it out with Nancy Pelosi, Jesse Jackson, and the editorial page from The Nation. They’re all about equally credible, and they all play the blame game equally well.
Incidentally, and with respect for robroy’s comment, my snarky comment about Ramsey is limited to his opining on the national debt. There’s no argument from me when it comes to evangelicals helping families with finances.
‘…$58,000 a year, they spend $75,000 a year and are $327,000 in credit card debt.”
And on top of all that, such a family would have contracted obligations of $1,000,000+. Would you lend money to such a family at all? let alone at the most favorable rate? How about after the family’s response is not to curb spending, but to “show leadership” by whining that the bank is stupid for lowering its credit rating?
Great post, Kendall — I like the mix just fine and obviously recognize that Jesse Jackson doesn’t hold a candle to Paul/Ramsey/WSJ — simply not in the same league in pretty much anything — intellect, character, credibility, whatever.
Pelosi and The Nation being simply organs of the party of the Democrats, I don’t at all mind your posting stuff by them — always good to know what libs believe.
It’s kind of odd to be picking on Dave Ramsey. He’s usually held up as a sound financial advisor across the political spectrum, regardless of what commentators think about his faith or his own politics. I still remember the story they did on him on that conservative bastion NPR’s “This American Life.”
As for getting Nancy Pelosi’s perspective, I didn’t see Ramsey blaming the Dems any more than the GOP… it’s really both parties spending like drunken sailors on shore leave, so unless you’re in favor of “Incumbents’ Rights” I don’t see the reason for the snark.
I guess you could disagree with his analogy, but it seems to hold water as far as the math goes. What we got amongst all the grandstanding last week was an agreement to mildly reduce the rate of increase in our spending, but to call that a “cut” misses the point of how far we’ve gone beyond what we bring in.
I thought all sides at least admitted that we have a huge deficit which needs to be curbed, even though some politicians have only mentioned it as lip service.
#3 your post is a great example of what I call source criticism, and it happens on many topics on the blog but especially on public policy/political type questions. It takes the thread off topic for starters. But it also says more about the poster than anything else.
I posted this because it is in wide circulation the last few days and people found it helpful. I would post it again no matter who said it or where I found it, if it made a genuine contribution, which I think it does.
The issue is the content of what in this case the post says about the debt/deficit problem.
Part of the problem in Ramsey’s putative family is that in January 2007 Mommy took over control of the finances. At that point the total credit card debt was only $215,000. And family expenditures were only $60,000.
Mommy blew up the family finances and put it all on the credit card. She now wants to blame her financial troubles on the credit card company for its reluctance to raise her credit limit yet again.
I have heard people say, “the national economy isn’t a household budget!” and leave off there. As if the federal government spending like there’s no tomorrow won’t have consequences. Well, it’s tomorrow.
Another critique I have for federal manipulation is that we have developed the mindset that recessions are bad. We need to spend trillions to avoid them. Really? Bush/the democratic congress firstly and then Obama/the democratic congress in an even bigger way tried to “soften the blow”. We needed a good cleaning of the house. TARP then Obama/Reid/Pelosi porkulus only delayed the pain.
Kendall said, “#3 your post is a great example of what I call source criticism, and it happens on many topics on the blog but especially on public policy/political type questions.” Post #6 is a much more extreme example of that.
On-topic, I like Ramsey and his principles helped my family eliminate our debt many years ago. But the fact is the government is NOT a family, and comparing a nation’s economy to a family budget is a faulty analogy on many levels. The government’s first priority should be creating jobs – including government jobs – and that requires spending money, not slashing budgets.
RE: “Post #6 is a much more extreme example of that.”
Not at all, as post #6 did not critique any post based on the “source.” Post #6 *did* criticize specific people — but then, criticizing specific people is not the definition of “source criticism.”
RE: “The government’s first priority should be creating jobs – including government jobs – and that requires spending money, not slashing budgets.”
Another demonstration of the immense chasm between the two sides duking it out in our country. Not only can the government not “create” private corporate jobs [though certainly it can create government jobs — but then government jobs *should* merely spring from a need for a job to be done that involves the government’s Constitutional duties, not from some random desire to spend other people’s money to “create government jobs”] but that is not even its third or fourth or fifth priority.
Its first priorities are to defend the country, preserve private property, and establish the rule of law, as so well articulated in the Constitution — these things merely fostering and maintaining and protecting a stable and civil society so that individuals can go about and do *their* work, which has to do in part with activities that involve “creating jobs.”
There is no remit or duty of the government to “create jobs.”
The fact that Scott K and Sarah hold antithetical and mutually exclusive ideas about the activities in which the State should be involved means that, at the end of the day, the only change that will take place is at the ballot box. One vision of the State’s identity will win out over the other. Certainly dialogue or conversation won’t fix the problem — one cannot “compromise” between two mutually exclusive ideas.
Looking forward to 13 months from now, when we can all go pull the lever for one — or the other — foundational political worldview about the role of the State, private property, individual liberty, the Constitution, and the free market.
to scott k: it is not to say that one shouldn’t consider the source, but rather the problem with source criticism is to [i]only[/i] consider the source and ignore the content. The post #3 alludes to partisanship of Dave Ramsey when Dave is simply pointing out a way to try to comprehend the mind numbing debt without any “blame game” attributions of the debt at all.
you also make the claim that the federal economy is not a household budget “on many levels” but that the primary focus of the federal government should be on job creation. It is interesting that Rep. Tim Scott has an [url=http://www.washingtontimes.com/news/2011/aug/9/pivoting-to-jobs-mr-obama/ ]op ed piece[/url] asking the president, if he really is “pivoting on jobs” (for the seventh time), could he start in Rep. Scott’s district? many small business leaders are saying that the impending onus of obamacare is the largest factor in putting the brakes on hiring. I will attest to that personally having let go and not rehired workers.
the people who put forth the truism “the federal economy is not a household budget” usually are the ones still arguing for unbridled spending. if i spend like a drunken sailor, i cannot pass my debts on to my kids. i read in fact that many elderly are intentionally incurring credit card debt that they intend to take to the grave. the federal government can pass the debt on to the next generation. Dave Ramsey often quotes Proverbs 13:22 “A good man leaves an inheritance for his children’s children, but a sinner’s wealth is stored up for the righteous.” I would argue that if the federal government had acted responsibly for the past 30 or more years, we would be creating jobs out the wazoo. canada put the brakes on rapidly rising federal spending before the crisis and has weathered the storm much better than the u.s. and western european countries that didn’t.
btw, if you do want to play the blame game, one should remember that by the constitution, it is congress that creates the budget. a very interesting graph [url=http://media.photobucket.com/image/budget deficits congress republican democratic split/brebsstops/US-Debtgdp.jpg ]here[/url] shows that when democrats controlled both houses, deficits rose precipitously, when it was split, the deficits were moderated and when republicans controlled both houses, it fell.
The family could get some more work and ask for a raise.
Of course, the problem is that the government isn’t a “family.” It’s an institution.
Sara comments that the government cannot create private corporate jobs, but then I wonder what Lockheed, Boeing and contractors would do without government money. I also wonder what local economies in upstate New York would do without corrections officers and school teachers. The government doesn’t simply hire government to do the work. They actually create demand in the private sector because the government – AKA the public _ buyes things, and they buy a lot of things. We cut Social Security and people will buy a little less metamucil and prune juice.
The moral argument that “government jobs *should* merely spring from a need for a job to be done that involves the government’s Constitutional duties, not from some random desire to spend other people’s money to “create government jobsâ€] but that is not even its third or fourth or fifth priority.” is contestable, from a constitutional standpoint. The founders didn’t assume that we would only need governance appropriate for an agrarian society. And the truth is that a stable society where freedoms are protect require a fairly sophisticated form of governance.
Because if “creating jobs” ensures a stable society by helping us avoid becoming a plutocracy or an aristocracy, the republic has a right to do so.
Sarah may not like to compromise, and that is one good reason people who think like her should not be elected. Fortunately, people have made compromises, since the beginning, all throughout our republic, and to the republic’s benefit. It’s when people sacrifice practicality to ideology the workings of the republic halt. It’s no coincidence that many of the public-private works projects over the last 150 years (trains, roads, aviation patents, etc) were effective compromises that created enormous wealth for many people.
For some of us value private property and a commercial economy, but also think that the federal government has a constitutional right to promote science and the “useful arts,” as well as regulate commerce (the deregulation hasn’t worked out that well). And the federal government should do it at least because banks and other financial institutions may only be incidentally interested in the health of the American economy.
In the recent debate, liberals decrying lack of compromise is laughable especially given their legislative ramming M.O. Dave Ramsey puts this nonsense in perfect perspective. It is obvious to all but the most die hard Obamanistas that the spending binge must come to an end. Obama has raised federal spending to levels unseen since WWII. He then proposed a budget with no cuts…which received no votes whatsoever. Then Harry Reid proposed a budget which assumed that military levels would be kept at present levels for the next decade…then assumed that it wouldn’t…and counted the difference as “savings”. The Boehner plan with its minuscule cuts was definitely a compromise, far too much of a compromise. A much better compromise would have been to merely scale back spending to 2007 levels – hardly unreasonable given our major troop reductions in Iraq. erals decrying lack of compromise is laughable especially with their legislative ramming sessions. Dave Ramsey puts this nonsense in perfect perspective. It is obvious to all but the most die hard Obamanistas that the spending binge must come to an end. Obama has raised federal spending to levels unseen since WWII. He then proposed a budget with no cuts…which received no votes whatsoever. Then Harry Reid proposed a budget which assumed that military levels would be kept at present levels for the next decade…then assumed that it wouldn’t…and counted the difference as “savings”. The Boehner plan with its minuscule cuts that maintains huge budget deficits was definitely a compromise, far too much of a compromise. A much better compromise would have been to merely scale back spending to 2007 levels – hardly unreasonable given our major troop reductions in Iraq.
Those of us with kids think it is absolutely reprehensible to be laying all this debt on our kids.
RE: “Sarah may not like to compromise . . . ”
Not sure where John Wilkins would get that idea. One doesn’t compromise with antithetical actions — you can’t compromise between say murdering somebody and letting them remain alive. One or the other will be done.
But yeh — compromise amongst people of the same foundational political worldview, same values, same goals . . . works just fine.
RE: ” . . . and that is one good reason people who think like her should not be elected.”
Heh — thankfully if we elect enough people of the same foundational political worldview, there won’t be any need. 2010 was a nice start.