Claims about budget balancing are baloney neither families nor businesses balance do

Discussion in 'Politics' started by merrill, Jan 20, 2012.

  1. merrill
    Offline

    merrill VIP Member

    Joined:
    Dec 27, 2011
    Messages:
    1,263
    Thanks Received:
    92
    Trophy Points:
    83
    Ratings:
    +92
    Turn on any of the television or radio gab shows and it won’t be long before you hear someone proclaim that government must live within its means just as families do and businesses must.

    Barack Obama gave this analogy the presidential seal of approval in a radio address in early July. In August, Ernie Boch, Jr., the Boston-based auto dealership magnate, added his two cents to Warren Buffett’s call to hike taxes on the rich: he would pay more taxes only if the government balanced its budget just as his and every other business must do.

    But the truth is neither families nor businesses balance their books in the sense of forgoing borrowing. And even if they did, to insist that government do the same would extinguish whatever remains of economic growth and job creation, not ignite them.
    Family and Business Red Ink

    Few families balance their budgets the way the guardians of financial rectitude are now demanding of government. Nearly all families spend more than they earn and borrow to do so. When a family takes out a car loan, a student loan, or a mortgage on a house, it’s spending money it doesn’t have.

    Is borrowing the road to ruin? Not if the debt is affordable. That depends not just on the size of the debt relative to the income available to service that debt, but also on how the family spends the borrowed money. For instance, assuming the size of the debt is manageable, borrowing to pay for education is justified if the education improves the family’s earning potential and so helps provide the income necessary to service the debt.

    The same holds true of businesses. They borrow to invest and operate, especially in the United States where corporations finance the bulk of their investments by borrowing rather than by issuing stock.

    While exact numbers are not available about the privately held Boch auto dealerships, rest assured that Boch’s company borrows to put the cars on his lot that he sells to the public or to build yet another dealership. That borrowing allows Boch’s and other businesses to spend more than they are taking in—Business 101.

    Families and businesses in the United States do quite a bit of borrowing and quite a bit more borrowing than they had in the past. Today families rely on credit to meet their needs—for everything from food to fuel, from education to entertainment, and especially housing.

    con't
    Government “Living Within Its Means”? | Dollars & Sense
     
  2. occupied
    Offline

    occupied Gold Member

    Joined:
    Nov 8, 2011
    Messages:
    16,458
    Thanks Received:
    2,251
    Trophy Points:
    280
    Ratings:
    +5,770
    A family without some borrowing potential is a family in trouble already without even the possibility of social mobility.
     
  3. merrill
    Offline

    merrill VIP Member

    Joined:
    Dec 27, 2011
    Messages:
    1,263
    Thanks Received:
    92
    Trophy Points:
    83
    Ratings:
    +92
    Face it folks neither small business nor corporate America balance their books as such. They just keep borrowing money no matter their wealth.

    It depends on how the borrowed money is spent however the debt is ongoing...
     
  4. CaughtInTheMid
    Offline

    CaughtInTheMid Active Member

    Joined:
    Jan 7, 2012
    Messages:
    949
    Thanks Received:
    80
    Trophy Points:
    28
    Ratings:
    +80
    many families and business have to declare bankruptcy due to too much debt.
     
    Last edited: Jan 21, 2012
  5. bripat9643
    Offline

    bripat9643 Diamond Member

    Joined:
    Apr 1, 2011
    Messages:
    67,936
    Thanks Received:
    8,100
    Trophy Points:
    2,030
    Ratings:
    +27,463
    You want the federal government to declare bankruptcy?

    You're serious?
     
  6. Leweman
    Offline

    Leweman Gold Member

    Joined:
    Aug 5, 2010
    Messages:
    4,009
    Thanks Received:
    489
    Trophy Points:
    130
    Ratings:
    +737
    Yep seems like its working out pretty well for everyone.
     
    • Thank You! Thank You! x 1
  7. Full-Auto
    Offline

    Full-Auto Gold Member

    Joined:
    Jun 13, 2009
    Messages:
    13,555
    Thanks Received:
    1,614
    Trophy Points:
    153
    Ratings:
    +1,615
    Doesnt sound like much of a plan.

    But that more then likely will be what it comes too.

    What will the debt be when it does blow up. 30 trillion...45.........25?
     
  8. merrill
    Offline

    merrill VIP Member

    Joined:
    Dec 27, 2011
    Messages:
    1,263
    Thanks Received:
    92
    Trophy Points:
    83
    Ratings:
    +92
    Payments debt are less of a burden on the federal government budget than debt payments are on family budgets.

    The U.S. government can perpetually refinance its debt in ways that are not open to the richest family or the largest business.

    Its debt burden, then, consists of the net interest payments on its debt, which will amount to 9.5% of federal revenues in 2011.

    That’s two percentage points less than the proportion of their income that families devoted to making their debt payments—interest payments and payment on the principal—in the beginning of 2011.

    Moreover, a good share of federal spending has gone to investments that are aimed at increasing its (and U.S. families’) future income—similar to a household taking out an education loan or a business borrowing to expand its operation.

    A recent study conducted by the Brookings Institution, the Washington-based think tank, found that in 2008 the federal government spent $253.8 billion on non-defense investments in infrastructure, mostly transportation, research and development, and education and training, all expenditures that will boost the productivity of the economy and help to provide the tax revenue to service the debt.

    That investment spending equaled a little more than half of the $453.6 billion budget deficit in 2008.

    Dollars and Sense

    Thanks democrats.......
     
  9. FactFinder
    Offline

    FactFinder VIP Member

    Joined:
    Mar 1, 2009
    Messages:
    2,641
    Thanks Received:
    202
    Trophy Points:
    83
    Ratings:
    +237
    The #1 argument against debt.....FREEDOM
     
    • Thank You! Thank You! x 1
  10. merrill
    Offline

    merrill VIP Member

    Joined:
    Dec 27, 2011
    Messages:
    1,263
    Thanks Received:
    92
    Trophy Points:
    83
    Ratings:
    +92
    Freedom from what?
     

Share This Page