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

[merrill]

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

 

[occupied]

A family without some borrowing potential is a family in trouble already without even the possibility of social mobility.

 

[merrill]

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...

 

[CaughtInTheMid]

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...

many families and business have to declare bankruptcy due to too much debt.

 

[bripat9643]

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...

many families and business have to declare bankruptcy due too much debt.

You want the federal government to declare bankruptcy?

You're serious?

 

[Leweman]

Yep seems like its working out pretty well for everyone.

 

[Full-Auto]

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...

many families and business have to declare bankruptcy due too much debt.

You want the federal government to declare bankruptcy?

You're serious?

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?

 

[merrill]

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.......

 

[FactFinder]

The #1 argument against debt.....FREEDOM

 

[merrill]

The #1 argument against debt.....FREEDOM

Freedom from what?

 

[merrill]

The aversion to the federal government deficits and borrowing fostered by pundits and politicians who pronounce that governments must balance their budgets like families and businesses do, even as the economy falters, is not only at odds with the facts. It has made us worse off by blocking government spending just when it is most needed.

When family budgets are tight, and spending constrained with so many out of work and with the overhang of mortgage debt, it falls to government to provide the spending necessary to get the economy going.

Government spending can put people to work and provide the income that will loosen tight family budgets, so they too can buy what businesses produce.

What’s needed is to reverse the austerity budgets favored by conservative politicians in the United States and Europe today.

More government spending and tax cuts targeted at working people, beyond what President Obama has proposed in his recent jobs bill, will surely make the budget deficit yet larger and drive up government debt.

But that ratio of government debt to GDP, currently 62.1%, is still far below the 1946 record peak of 109% at the end of World War II, which was followed by the two of the strongest decades of economic growth in U.S. history.

It has happened before, and during even worse economic conditions than today’s stagnation. In a Pittsburgh campaign speech in October 1932, some three years into the Great Depression, presidential candidate Franklin Delano Roosevelt promised that he would slash federal expenditures by 25% and balance the federal budget.

But once in office, FDR reneged on his promise to balance the budget and initiated the New Deal. When he returned to Pittsburgh during his 1936 campaign for reelection, FDR declared, “to balance the budget in 1933, or 1934, or 1935 would be a crime against the American people.”

Dollars and Sense

 

[FactFinder]

The #1 argument against debt.....FREEDOM

Freedom from what?

Now that is one strange question. You ever paid off a loan and had the extra bucks evey month? You ever say to yourself, "Hey, this doodad is one hell of a lot cheaper when I pay cash for it?"

 

[tenthertoo]

Bad comparison:

Generally families borrow to secure a tangible like a home, a car, appliances. They agree to make regular payments and at the end own something tangible.

The fed borrows to pay expenses, make no regular payments, and at the end (even if they pay the loan off) they own nothing.

 

[merrill]

Government budgets cannot be compared to a home budget. The variables are quite different.
Although both budgets do borrow money.

Homes do not start multi trillion wars for oil control

Homes do not provide emergency funding for violent weather catasrophies

Homes do not provide tax returns

Homes do not provide food inspectors

Homes do not provide disabled veterans benefits

Homes do not provide annual $4,000 pay increases to congress

Homes do not provide for interstate highways

Home budgets are are much more narrow and controlled

No administration has ever reduced the size nor cost of government in spite of rhetoric.

 

[editec]

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

Yup.

But its a kind of bologny that people with a limited understanding of what society really is think they can understand.

 

[CaughtInTheMid]

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...

many families and business have to declare bankruptcy due too much debt.

You want the federal government to declare bankruptcy?

You're serious?

my point was that there is way too much federal debt and we can't continue down this path since it will lead to problems we don't want to face.

 

[Toro]

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

Families and businesses that consistently spend more than what they bring in eventually go bankrupt. Both borrow but both bring in more money than they spend and use that excess cash flow to pay off debt, or at least maintain the level of debt, but if they continuously add to debt, they go bankrupt. As the government will too.

 

[merrill]

"Government spending can put people to work and provide the income that will loosen tight family budgets, so they too can buy what businesses produce.

What’s needed is to reverse the austerity budgets favored by conservative politicians in the United States and Europe today.

More government spending and tax cuts targeted at working people, beyond what President Obama has proposed in his recent jobs bill, will surely make the budget deficit yet larger and drive up government debt.

But that ratio of government debt to GDP, currently 62.1%, is still far below the 1946 record peak of 109% at the end of World War II, which was followed by the two of the strongest decades of economic growth in U.S. history."

Dollars and Sense

 

[Quantum Windbag]

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

Families and/or businesses that do not live within their means end up in bankruptcy court. There were 1,467,221 bankruptcy filings in the year ending Sep 30 2011, 1,417,326 of those were from individuals/families.

Do you really want to see the US end up in bankruptcy because you are an idiot?

 

[Care4all]

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

Families and businesses that consistently spend more than what they bring in eventually go bankrupt. Both borrow but both bring in more money than they spend and use that excess cash flow to pay off debt, or at least maintain the level of debt, but if they continuously add to debt, they go bankrupt. As the government will too.

eventually.....perhaps.

But interest rates are fairly low, so repayment amount is fairly low, and a balance on what they owe, like mortgages and credit card spending is the NORM for most Americans and most Americans do pay their bills....

Suzi Ormon once said a mortgage and car payment is all the borrowing she'd like to see people have on credit....but those 2 things were ok.....of course in moderation.

we own home and cars outright, thank goodness, but we have started to put some big purchases on our credit card....